Re: ISI INTERVIEW PREP

Posted by Preet on Jul 05, 2012; 6:58am
URL: http://discussion-forum.276.s1.nabble.com/ISI-INTERVIEW-PREP-tp7578819p7579084.html

Well i find even this line of reasoning to be correct
Sorry i misunderstood it when u earlier made the same point

neha wrote

@preet ,, what you are saying makes sense to me,, but i have one more doubt.

Instead of minimizing the total expenditure we can think in terms of maximizing the utility. Since at Px=0 and Py=1 agent 1 has no income,, so agent 2 cant think of selling any of his y units to him and to maximize his utility he would want 1000 units of x [(1000,1000) is preferred over (999,1000)]  and there is no price attached to it,he can very well afford to do that. so he would want 1000 of x which leads to excess demand of it.. so thats why it can be competitive.  What do you think?