Previously we have considered agents whose income is fixed


Previously, we have considered agents whose income is fixed independently of prices. For this problem, consider instead an agent whose income comes from selling his endowment omega, where omega_1 > 0 and omega_2 > 0. Suppose that originally prices are (p_1, p_2), and the agent demands more of good 1, and then the price of good 1 increases to p'_1 > p_1. Give an example where this price increase makes the agent worse off, and give a second example where this price increase makes the agent better off.

Request for Solution File

Ask an Expert for Answer!!
Business Economics: Previously we have considered agents whose income is fixed
Reference No:- TGS01548274

Expected delivery within 24 Hours