Consider trade between two consumers (1 and 2) and two goods, X and Y. Suppose the total quantities of each good are 100 units. Each consumer has Cobb-Douglas preferences given by: U(X,Y) = XY Denoting by X1 the first consumer's consumption of X and by Y1 the first consumer's consumption of Y, the contract curve consists of all allocations where A. X1 = 0.5Y1 B. X1 = 2Y1 C. X1 = Y1 square D. X1 = Y1 %3D %3D

Consider trade between two consumers (1 and 2) and two goods, X and Y. Suppose the total quantities of each good are 100 units. Each consumer has Cobb-Douglas preferences given by: U(X,Y) = XY Denoting by X1 the first consumer's consumption of X and by Y1 the first consumer's consumption of Y, the contract curve consists of all allocations where A. X1 = 0.5Y1 B. X1 = 2Y1 C. X1 = Y1 square D. X1 = Y1 %3D %3D

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.9P

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