Re: please some tell me how to solve mathematically such questions?

Posted by Asd1995 on May 01, 2018; 12:21am
URL: http://discussion-forum.276.s1.nabble.com/please-some-tell-me-how-to-solve-mathematically-such-questions-tp7609099p7609100.html

Each agent maximizes utility w.r.t budget constraint(Write these out. The budget constraint is px*x+py*y=px*(endowment of x)+py*(endowment of y)). From this, after optimizing, you get the demand function of both agents. Now use those to put total demand of each good=total supply of each good. Solve for prices. In such a setup you can always assume price of any one good=1 to make the algebra easier.