Establish the equation which describes the contract curve

Reference no: EM13241829

There are two consumers, A and B. A's preferecne is represented by uA(xA1,xA2)=4ln(xA1)+3ln(xA2) and B's preference is represented by uB(xB1,xB2)=3ln(xB1)+5ln(xB2). A's initial holding is (wA1,wA2)=(12,4) and B's initial holding is (wB1, wB2)=(8,16).

Establish the equation which describes the contract curve (the set of efficient allocations) in terms of (xA1, xA2).

Reference no: EM13241829

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