Two Individuals, a and B, Are Free to Engage in Trade

question 99

Essay

Two individuals, A and B, are free to engage in trade of clothing and food. Initially, A has 12 units of clothing and 9 units of food, and B has 8 units of clothing and 11 units of food. The individuals have the following utility functions in clothing C and food F:
U_A = 0.15Q_C ∙ Q_F
U_B = 0.08Q_C ∙ Q_F
where Q_F represents units of food, Q_C represents units of clothing, and U represents utility. Determine if a mutually beneficial trade is possible between A and B. If so, who would trade for what?

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Definitions:

Monitoring System

A system that continuously observes, checks, and records the operations or activities of a project or process for analysis and problem detection.

Human Capital

The collective skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.

Employees' Competence

The skills, knowledge, and experience possessed by employees that enable them to perform their tasks effectively.

Experiences

Experiences refer to the interactions or events that individuals go through which can impact their perceptions, learning, and personal growth, playing a significant role in consumer choices and life satisfaction.