Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B)...

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=B1/3SC2/3S U s = B S 1 / 3 C S 2 / 3 Andrew's preferences are given by: UA=B1/2AC1/2A U A = B A 1 / 2 C A 1 / 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. What is the equilibrium price of computers relative to bikes (p)? Your Answer:

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Rahul Sunny answered 1 month ago

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