Consider a pure exchange market with two goods ( X and Y) and two consumers (1 and 2) with utilities
U1 ( X1, Y1) = 2 log X1 + log Y1
U2 ( X2, Y2) = log X2 + 2 log Y2
The initial endowments for consumer 1 is (2,1) and for consumer 2 is (0,3)
a) Draw the edgeworth box diagram for this exchange economy
b) What would be the competitive equilibrium?
c) Draw the contract curve in the Edgeworth diagram?