ASSIGNMENT
Answer the question with graph
Consider an economy which can produce two commodities with quantities x1 and x2. It is possible to produce (x1, x2) = (3,0). It is also possible to produce (x1, x2) = (0,2). It is also possible to produce all convex combinations of these two allocations.
Construct the set of feasible production possibilities graphically.
There are only two individuals, 1 and 2. Utilities are as follows: u1 = 2×1 + 2. = 3×2 + 1.
Construct the set of feasible utility allocations for the two individuals.
Is the information given so far sufficient to find the Nash bargaining solution?
Construct the set of feasible production possibilities graphically. Is the information given so far sufficient to find the Nash bargaining solution?
