Consider two consumers 1 and 2 with wealth w₁ and we respectively. There are two goods 1 and2. u₁(11,221) = 11 + 21, u2(x12,22) = 12 +22. Assume that pi #p2.a) Prove or disprove that the aggregate demand can be written as (p, w₁ + w₂).b) Consider a Bergson-Samuelson social welfare function W (u₁. uz) = log u₁ + log u₂. Under whatcondition, can these two consumers be represented by a normative representative consumer withrespect to this social welfare function?

Aggregate Demand Definition: Aggregate demand implies the total quantity of goods demanded by all…

Consider two consumers 1 and 2 with wealth w₁ and we respectively. There are two goods 1 and 2. u₁(11.21) = 211 +221, U₂(F12, F22) = 212 +22. Assume that pi #p2- a) Prove or disprove that the aggregate demand can be written as (p, w₁ + ₂). b) Consider a Bergson-Samuelson social welfare function W(u₁, 1₂) = log u₁ +log u₂. Under what condition, can these two consumers be represented by a normative representative consumer with respect to this social welfare function?

Consider two consumers 1 and 2 with wealth w₁ and we respectively. There are two goods 1 and 2. u₁(11.21) = 211 +221, U₂(F12, F22) = 212 +22. Assume that pi #p2- a) Prove or disprove that the aggregate demand can be written as (p, w₁ + ₂). b) Consider a Bergson-Samuelson social welfare function W(u₁, 1₂) = log u₁ +log u₂. Under what condition, can these two consumers be represented by a normative representative consumer with respect to this social welfare function?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.14P

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