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Questions › IIT JAM › IIT JAM 2023 › Q11
2 marks, −0.667Microeconomics › General equilibrium and exchange economies › Existence and non-existence of equilibriumHardabout 3 min

IIT JAM 2023 Question 11: General equilibrium and exchange economies

In a 2-agent, 2-good exchange economy, agent iii has utility ui(xi,yi)=max⁡{xi,yi}u_i(x_i,y_i)=\max\{x_i,y_i\}ui​(xi​,yi​)=max{xi​,yi​}. Endowments are (xˉ1,yˉ1,xˉ2,yˉ2)=(25,5,5,5)(\bar x_1,\bar y_1,\bar x_2,\bar y_2)=(25,5,5,5)(xˉ1​,yˉ​1​,xˉ2​,yˉ​2​)=(25,5,5,5). Which price vector (px,py)(p_x,p_y)(px​,py​) is part of a competitive equilibrium?

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In a 2-agent, 2-good exchange economy, agent i has utility uᵢ(xᵢ,yᵢ)=max {xᵢ,yᵢ}. Endowments are (x̄₁,ȳ₁,x̄₂,ȳ₂)=(25,5,5,5). Which price vector (pₓ,p_y) is part of a competitive equilibrium? (A) (pₓ,p_y)=(2,1) (B) (pₓ,p_y)=(2,2) (C) (pₓ,p_y)=(1,2) (D) (pₓ,p_y)=(4,2)

Also written as: In a 2-agent, 2-good exchange economy, agent i has utility u_i(x_i,y_i)=max {x_i,y_i}. Endowments are (x_bar_1,y_bar_1,x_bar_2,y_bar_2)=(25,5,5,5). Which price vector (p_x,p_y) is part of a competitive equilibrium?

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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