Re: MICRO DOUBT

Posted by RajEco on Mar 28, 2014; 3:11am
URL: http://discussion-forum.276.s1.nabble.com/MICRO-DOUBT-tp7585593p7585620.html

I think the answer is b.

You can do it like this-

U1 = 2x1 + y1
U2 = x2 + 2y2


The set of fair allocations must be that each should prefer their own bundles as compared to the other person.-

For 1:  2x1 + y1 => 2x2 + y2               .....(i)
For 2:  x2 + 2y2 => x1 + 2y2

We also know that x1 + x2 = 14 and y1 +y2 = 18
Put x2 = 14- x1  and y2= 18-y2  in (i)

You will get 4x1 + 2y1 => 46
similarly you can the 2nd inequality.