Re: DSE Previous Papers Solutions

Posted by SJ on Jun 01, 2012; 6:18am
URL: http://discussion-forum.276.s1.nabble.com/DSE-Previous-Papers-Solutions-tp7577361p7577425.html

Thanks Ram.. ur solutions are really helpful!
1 doubt though: in the question no. 3 i m getting option (b) as the answer.. considering the demand and total quantity of goods equations.
For agent 1: demand for good 1 = (100p1+100p2)/(p1+p2) = 100...same for good 2
(this is considering the utility function he wishes to maximize)
For agent 2: demand for good 1 = (50p1)/p1 and for good2 = (50p1)/p2

now using total demand =total supply
good1:     100+50 = 150 (identity)
good2:     100+(50)(p1/p2)=100
               which solves for p1=0.