Chris and Dana live in an exchange economy with two goods: good Q and good R. Chris starts off with an endowment of 6 units of Q and 10 units of R. Dana starts off with an endowment of 8 units of Q and 8 units of R. Suppose that the price of good R is pR=1 and the price of good Q is pQ=2. a )At these prices, does the market clear? Yes or no? Explain your answer. b) What relationship must hold between the consumption of each agent and the price of the two goods at the market clearing equilibrium? Write the equation

Macroeconomics
13th Edition
ISBN:9781337617390
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter1: What Economics Is About
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Chris and Dana live in an exchange economy with two goods: good Q and good R. Chris starts off with an endowment of 6 units of Q and 10 units of R. Dana starts off with an endowment of 8 units of Q and 8 units of R.

Suppose that the price of good R is pR=1 and the price of good Q is pQ=2.

a )At these prices, does the market clear? Yes or no? Explain your answer.

b) What relationship must hold between the consumption of each agent and the price of the two goods at the market clearing equilibrium? Write the equation

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