Competitive equilibrium from the initial allocation

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Reference no: EM131092099

A no production economy has 2 consumers (A and B) who each consume two different goods (x and y). Person A is endowed with (120,270) and has a utility function Ua(Xa,Ya)=X^(2/3)Y^(1/3) . Person B is endowed with (480,180) and has a utility function Ub(Xb,Yb)=X^(1/3)Y^(2/3).

Show that the Pareto Efficient point is not the competitive equilibrium from the initial allocation.

Reference no: EM131092099

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