Consider Trade Between Two Consumers (1 and 2)and Two Goods,X

question 70

Essay

Consider trade between two consumers (1 and 2)and two goods,X and Y.Suppose the total quantities of each good are 100 units.Each consumer has Cobb-Douglas preferences given by:
U(X,Y)= XY
What is the shape of the contract curve,i.e.derive the equation? How does the contract curve change is consumer one has the utility function
U(X,Y)= X²Y
while the other consumer's preferences are as before? Again,derive the equation for the contract curve.

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