In the same exchange economy ('s endowment , 's endowment ), suppose lexicographically prefers to and treats and as perfect complements. The set of competitive equilibrium allocations
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2 marks, −0.666666666666667MicroeconomicsGeneral equilibrium and exchange economiesExistence and non-existence of equilibriumVery Hardabout 5 min
DSE 2017 Question 7: General equilibrium and exchange economies
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In the same exchange economy (A 's endowment (0,1), B 's endowment (2,0)), suppose A lexicographically prefers y to x and B treats x and y as perfect complements. The set of competitive equilibrium allocations (A) includes the allocation (1,0) for A and (1,1) for B (B) includes the allocation (0,1) for A and (2,0) for B (C) is empty (D) includes all allocations (x,1) for A and (2-x,0) for B, where x∈[0,2]
General equilibrium and exchange economies has come up 69 times in 7 exams since 2004.
What this question tests
This question is on Existence and non-existence of equilibrium, part of General equilibrium and exchange economies in Microeconomics.
When a competitive equilibrium exists and the preferences that make it fail.
TestStop has 13 past-paper questions on this subtopic.
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