The first step of the solution is posted here. We have to find demand of consumer 1. I do not understand why do we say that the budget constraint is equal to e + p * e Moreover, how can 1 2. we find endowments when they are supposed to be given. 1. Consider an exchange economy with two identical consumers. Their common utility function is u i(x1,x2)=x1x21 for 0<<1. Society has 10 units of x1 and 10 units of x2 in all. Find endowments e1 and e2 and Walrasian equilibrium prices that will support as a Walrasian Equilibrium Allocation the equal-division allocation giving both consumers the bundle (5,5). Demand of consumer 1 : maxx1x 21s.t.x1+px2=e1+pe2.

1. The first step of the solution is posted here. We have to find demand of consumer 1. I do not
understand why do we say that the budget constraint is equal to e
1
+ p * e
2.
Moreover, how can
we find endowments when they are supposed to be given.
1. Consider an exchange economy with two identical consumers. Their common utility function is u
i(x1,x2)=x1x21 for 0<<1. Society has 10 units of x1 and 10 units of x2 in all. Find endowments e1
and e2 and Walrasian equilibrium prices that will support as a Walrasian Equilibrium Allocation the
equal-division allocation giving both consumers the bundle (5,5). Demand of consumer 1 : maxx1x
21s.t.x1+px2=e1+pe2