Demonstrate that the allocation the consumers start


Assume that two consumers care only about the goods that they own. (The goods are private for them.) Starting from a competitive equilibrium allocation, is it possible for both consumers to be made simultaneously better off by trading with each other? Demonstrate that your answer is correct. Illustrate your answer with graphs showing possible trades between the two consumers. Describe what it is in your graphs that demonstrate that the allocation the consumers start from is a competitive equilibrium allocation.

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Macroeconomics: Demonstrate that the allocation the consumers start
Reference No:- TGS0873244

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