General Equlibrium

[Devika]

http://discussion-forum.2150183.n2.nabble.com/General-Equilibrium-May-18-td7565438.html;cid=1369512824861-668

Somebody please have a look at this link. Amit sir had posted this GE problem last year. I'm having trouble deciphering the utility function of agent 1.

Help please!

[Devika]

Is this preference lexicographic?

[lol]

though it looks like lexicographic preferences it is not.

In lexicographic preferences ordering is such that first quantity of X will be compared irrespective of the quantity of the other good ( here Y).

So if one bundle has more of X it will be preferred irrespective of how much Y it contains.

let me know if you find anything wrong.

Cheers

[Devika]

Hey,

Thank you! Could you explain the utility function for the question posted?

Thaks again :)

[duck]

Hi Devika.. :)

That utility function is saying:
Consider two bundles:
A=(1,2) ; B=(1,0)
Out of the two bundles, consumer will first look at the sum.
In this case, sum of quantities in A > Sum of quantities in B.
Therfore, consumer will prefer A to B.

Now, if the Sum is same in both the bundles, then cosumer will look at good2.
eg: A=(1,2) and B= (2,1)
Here, sum is the same. But, A has more good2 than B.
So, A is preferred over B.

[Devika]

Hey
I just saw this!
Thank you!