Questions tagged [edgeworth-box]
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questions
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Shape of contract curve in an Edgeworth-Box economy
I've noticed that contract curves for preference functions $u_{1,2}=(x_1x_2)^{1/2}$ and $u_{1,2}=x_1(x_2)^{1/2}$ is the diagonal of the Edgeworth Box. A general question arose, and I can't figure it ...
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1answer
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In a box diagram, why does efficiency locus lie on one side of the diagonal, if both sectors haves constant returns to scale function?
The following is what I understand, so far.
If we measure labour in the $x$-axis and capital in the $y$-axis, the slope of diagonal of the box is the capital-labour ratio $K/L$ in the economy. Let $A$ ...
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0answers
42 views
Computing the competitive equilibrium from the edgeworth box
Consider the following Edgeworth economy. There are two consumers $i \in {1,2}$ and two goods x and y. Consumer $i$ consumes $(x_i,y_i)$, where $x_i ≥0$ and $y_i ≥0$. Endowments are $ω_1 =(a,0)$ and $...
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0answers
48 views
Leontif case for Edgeworth box
Consumer 1 has utility $u_1=min\{x_1,y_1\}$, Consumer 2 has utility $u_1=min\{x_1,2y_1\}$, their endowments are $w_1=(a,0)$ and $w_1=(b,0)$ and in this case $a=b$.
I know the offer curves look like ...
2
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1answer
102 views
Offer curves in general equilibrium
I'm having trouble understanding how to find the offer curves in general equilibrium. Is there a general way that we can use to find it?
I can understand the Pareto set and contract curve but when it ...
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0answers
19 views
Price equilibria with transfers
I am pretty new to Microeconomics so please bear with me if I am missing something obvious.
I am solving the following problem:
The question is in the setting of pure exchange economy with two ...
2
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1answer
65 views
CES utility function in an Edgeworth box
Two consumers have the CES utility function $x_1^\beta +x_2^\beta$, for $0<\beta<1$, their initial endowments are $w^1=(1,0)$, $w^2=(0,1)$ Draw the Core of this economy in an Edgeworth box. Note ...
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1answer
270 views
How to find the Utility Possibility Frontier when there are Perfect Substitutes?
I am trying to derive the Utility Possibility Frontier (UPF) when both utility functions display perfect substitutes (in an Edgeworth economy with to consumers and two goods).
The specific problem:
$...
1
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0answers
56 views
Pareto Set with strictly convex preferences
Suppose the agents A and B have the following utility functions $x_A y_A+12x_A+3y_A $ and $x_By_B +8x_B+9y_B$ respectively with endowments (8,30) and (10,10).
The contract curve's equation turns out ...
4
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1answer
130 views
Contract curve and Pareto frontier
Consider an exchange economy with two agents.
Each agent $i \in \{1,2\}$ derives utility $u^i(x_1,x_2) \in \mathbb R$ by consuming $(x_1,x_2) \in \mathbb R_+^2$.
Let $u_j^i(x_1,x_2) = \partial u^i(...
