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Find the competitive equilibrium allocation and prices

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Reference no: EM133124502

Consider an economy with two goods, a public good (x) and labor (n). Individual utility is given by Ui = ln(x) + li where x = x1 +x2 and li = 24-ni. There is a competitive market producing the public good using the technology: x = 5n = 5(n1 + n2)

(a) Find the competitive equilibrium allocation and prices.

(b) Find the ecient allocation.

Reference no: EM133124502

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