Write the equation of the contract curve

Reference no: EM13191589

Consider an exchange economy with two goods, 1 and 2, and two consumers, A and B. The consumers are initially endowed with a total of unit of each good, i.e. w1 = w1A + w1B = 1 and w2 = w1B + w2B = 1. Their preferences are represented by UA(x1, x2)= x1x2^2 and uB(x1, X2) = x1^2X2. Write the equation of the contract curve.

Reference no: EM13191589

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