Sarah and Andrew are two traders in a pure exchange economic with two goods,Bikes (B)and Computers (C).Sarah's preferences are described by the Cobb-Douglas Utility function:
US = BS¹/³ᶜS²/³
Andrew's preferences are given by:
UA = BA¹/²ᶜA¹/²
Assume the price of Bikes is 1 and the price of computers is p.The initial endowments are BA = 10,BS = 20,CA = 20 and CS = 10.Solve for the competitive equilibrium prices (relative prices)and quantities.

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The Answer of Sarah and Andrew are two traders in a pure exchange economic with two goods,Bikes (B)and Computers (C).Sarah's preferences are described by the Cobb-Douglas Utility function:
US = BS¹/³ᶜS²/³
Andrew's preferences are given by:
UA = BA¹/²ᶜA¹/²
Assume the price of Bikes is 1 and the price of computers is p.The initial endowments are BA = 10,BS = 20,CA = 20 and CS = 10.Solve for the competitive equilibrium prices (relative prices)and quantities.

Sarah and Andrew Are Two Traders in a Pure Exchange