In a small exchange economy, three nations have been given red and yellow color, each of...

In a small exchange economy, three nations have been given red and yellow color, each of the three nations have recieved 25 cans of each color. The nations Cobb-Douglas utility functions are A) U(R,Y) = R^0.1Y^0.9, B) U(R,Y)=R^0.2Y^0.8 and C) U(R,Y) = R^0.3Y^0.7. The nations trade.

Question 1) At what price relation will there be an equilibrium?

Question 2) How much of each color will the nation consume?

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Expert Solution

Rahul Sunny answered 1 year ago

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