Consider a society consisting of just a farmer and a tailor.The farmer has 30 units of food but no clothing.The tailor has 60 units of clothing but no food.Suppose each has the utility function U = F^1/3C2/3If the price of clothing is always $1,and the food price is currently $1,then we can conclude

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The farmer's marginal utility of food is 10, and his marginal utility of clothing is 20. The tailor's marginal utility of food is 20, and his marginal utility of clothing is 10. So, the farmer is willing to trade 2 units of food for 1 unit of clothing, and the tailor is willing to trade 1 unit of clothing for 2 units of food. This means that the market is at a competitive equilibrium, where the price of food is $1 and the price of clothing is $1.

Consider a Society Consisting of Just a Farmer and a Tailor.The