Suppose there is an island with only 2 people on it, Pamela and Quentin. They have endowment of only 2 goods: bananas and fish. Bananas = good 1, fish =good2
endowment vectors for Pamela & Quentin:
(Wp1, Wp2) = (10,5)
(Wq1, Wq2) = (5,20)
utility fncs for Pamela & Quentin:
Up(Xp1, Xp2) = Xp1Xp2
Uq(Xq1, Xq2) = Xq1Xq2
Is it possible for trade to occur in this economy? why or why not?... (how would i shade in the area indicating all possible final allocations after trade?)
Consider the following trades+ show analysis whether will/won't trade:
1. Pamela trades 5 of her bananas for 2 fish from Quentin
2. Q trades 1 banana for 2 fish from P.
3. Q trades 1 banana for 5 fish from P.
4. P trades 2 bananas for 5 fish from Q.
(find the allocations after trade and then use utility fnc)
how would i do this? i'm supposed to plug in these #s to the utility fnc right? but i don't really understand the process or why... please help!! thank you!!!
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