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DSE 2013[NON ENVY ALLOCATION]

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DSE 2013[NON ENVY ALLOCATION]

ABC
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Q. U<X1,X2>= aX1+X2 for consumer (A) and U(y1,y2)=y1.y2 for consumer (B)
Thier initial endowment--- A(4x1,0x2) & B(1y1,5y2)
Total endowment--- x1+y1=5 & x2+y2=5
1. WT WILL BE THE NON ENVY ALLOCATION..........??????
2.WT WILL BE THE PARETO ALLOCATION ..............??????
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Re: DSE 2013[NON ENVY ALLOCATION]

mats
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The first answer was (c). And the second answer was always pareto optimal.
.
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Re: DSE 2013[NON ENVY ALLOCATION]

abcde
9 posts
what was the option c ??
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Re: DSE 2013[NON ENVY ALLOCATION]

madhur1987
35 posts
option c was pareto optimal if alpha is greater than equal to 5 which i think is correct bcoz for eg ig alpha is 1 than above allocation is not pareto optimal