Equilibrium slutsky decomposition


Question:

If I had initial endowments XA = (0, X2), and XB = (X1, 0)

Is there any impact if both goods were inferior, X2 for A and X1 for B?

If I started with one equilibrium p* and went to another p* that had a higher price for X1, could the second p* be an equilibrium (using a Slutsky decomposition and keeping in mind the inferiority information supplied)?

Solution Preview :

Prepared by a verified Expert
Macroeconomics: Equilibrium slutsky decomposition
Reference No:- TGS02102140

Now Priced at $20 (50% Discount)

Recommended (98%)

Rated (4.3/5)