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What happens in general equilibrium if consumers have perfect complements or perfect substitutes utility functions?

\text{Consumer utility function: }u(x_1,x_2) = \min\{x_1,x_2\}
\text{Good 1 production function: }Y_1(L_1) = 6L_1^{1 \over 3}
\text{Good 2 production function: }Y_2(L_2) = 12L_2^{1 \over 3}

What is the equilibrium price ratio?

\text{Consumer utility function: }u(x_1,x_2) = \min\{x_1,x_2\}
\text{Good 1 production function: }Y_1(L_1) = 6L_1^{1 \over 3}
\text{Good 2 production function: }Y_2(L_2) = 12L_2^{1 \over 3}

Suppose that in equilibrium, \(p_1 = 80\) and \(Y_1 = 24\). What must the wage rate be?

An Old Test Question

By Chris Makler

An Old Test Question

General equilibrium

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