In the same exchange economy (agent 's utility , endowments and ), suppose agent instead lexicographically prefers to . The set of competitive equilibrium price ratios is
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4 marks, −1MicroeconomicsGeneral equilibrium and exchange economiesExistence and non-existence of equilibriumModerateabout 3 min
DSE 2020 Question 26: General equilibrium and exchange economies
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In the same exchange economy (agent 2 's utility u₂=x+y, endowments (0,10) and (10,0)), suppose agent 1 instead lexicographically prefers y to x. The set of competitive equilibrium price ratios pₓ/p_y is (A) {1} (B) [0,1] (C) (0,1] (D) ∅
Also written as: In the same exchange economy (agent 2 's utility u_2=x+y, endowments (0,10) and (10,0)), suppose agent 1 instead lexicographically prefers y to x. The set of competitive equilibrium price ratios p_x/p_y is
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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