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Questions › DSE › DSE 2015 › Q22
2 marks, −0.666666666666667Microeconomics › General equilibrium and exchange economies › Competitive equilibrium in an exchange economyHardabout 4 min

DSE 2015 Question 22: General equilibrium and exchange economies

For the same three agents (u1=xyu^1=xyu1=xy, u2=x3yu^2=x^3yu2=x3y, u3=xy2u^3=xy^2u3=xy2), if the endowments are (0,2),(12,0),(0,12)(0,2),(12,0),(0,12)(0,2),(12,0),(0,12) respectively, then

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For the same three agents (u¹=xy, u²=x³y, u³=xy²), if the endowments are (0,2),(12,0),(0,12) respectively, then (A) an equilibrium price ratio does not exist (B) the equilibrium price ratio is the same as in the previous question (C) p_X/p_Y<1 is an equilibrium price ratio (D) p_X/p_Y>1 is an equilibrium price ratio

Also written as: For the same three agents (u^1=xy, u^2=x^3y, u^3=xy^2), if the endowments are (0,2),(12,0),(0,12) respectively, then

General equilibrium and exchange economies has come up 69 times in 7 exams since 2004.

What this question tests

This question is on Competitive equilibrium in an exchange economy, part of General equilibrium and exchange economies in Microeconomics.

Finding the prices at which every consumer's chosen bundle clears the market.

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Question from the DSE 2015 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.