There are only two consumers, Ann and Bob, and only two goods, the quantities of which are denoted by x and y. Ann owns the bundle (15, 25) and Bob owns the bundle (15, 0). Ann’s and Bob’s preferences are described by the utility functions uA(xA, yA) = 6logxA + logyA and uB(xB, yB) = yB + 30logxB.
(a) Determine each consumer’s demand function.
(b) Determine a Walrasian equilibrium price-list and allocation.
(c) Depict the equilibrium in an Edgeworth box diagram.