Suppose the market prices are px=15, and py=8. Which of the following exchanges does this little...

Suppose the market prices are px=15, and py=8. Which of the following exchanges does this little “world” allow?

15/23 units of good x for 1 unit of good y
1 unit of good x for 8/15 units of good y
15/8 units of good x for 1 unit of good y
8 units of good x for 15 units of good y
15 units of good x for 8 units of good y

Expert Solution

Option B

In equilibrium, 15X=8Y

X=(8/15)Y or 1 unit of good x for 8/15 units of good y

Rahul Sunny answered 2 years ago

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