Suppose we live in an exchange economy with two goods.Together,we own 300 of good 1 and 300 of good 2.My tastes are captured by the utility function $u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 2 } + 50 \ln x _ { 1 }$ and yours are captured by the utility function $u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 2 } + 100 \ln x _ { 1 }$ .
a.Calculate the portion of the contract curve that lies in the interior of the Edgeworth Box.
b.Can you make intuitive sense of your answer?

Question

Suppose we live in an exchange economy with two goods.Together,we own 300 of good 1 and 300 of good 2.My tastes are captured by the utility function $u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 2 } + 50 \ln x _ { 1 }$ and yours are captured by the utility function $u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 2 } + 100 \ln x _ { 1 }$ . 
a.Calculate the portion of the contract curve that lies in the interior of the Edgeworth Box.
b.Can you make intuitive sense of your answer?

Quizplus · Accepted Answer

The Answer of Suppose we live in an exchange economy with two goods.Together,we own 300 of good 1 and 300 of good 2.My tastes are captured by the utility function $u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 2 } + 50 \ln x _ { 1 }$ and yours are captured by the utility function $u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 2 } + 100 \ln x _ { 1 }$ . 
a.Calculate the portion of the contract curve that lies in the interior of the Edgeworth Box.
b.Can you make intuitive sense of your answer?

Suppose We Live in an Exchange Economy with Two Goods u(x1,x2)=x2+50ln⁡x1u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 2 } + 50 \ln x _ { 1 }u(x1​,x2​)=x2​+50lnx1​

Suppose We Live in an Exchange Economy with Two Goods $u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 2 } + 50 \ln x _ { 1 }$