Consider a society consisting of just a farmer and a tailor. The farmer has 30 units...

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^1/3C^2/3 . If the price of clothing is always $1, and the food price is currently $1, then we can conclude

Question 10 options:

	the market is at a competitive equilibrium.
	the price of food will drop towards a competitive equilibrium.
	the price of food will increase towards a competitive equilibrium.
	None of the above.

Expert Solution

Rahul Sunny answered 7 months ago

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