Andrew and Sarah Are Two Traders in a Pure Exchange

question 90

Essay

Andrew and Sarah are two traders in a pure exchange economy with two goods,Bikes and TVs.Suppose Andrew has preferences given by:
U(B,T)= BT
where B is the number of bikes and T is the number of TVs.Sarah only derives utility from TV,so her utility function can be given by:
V(B,T)= T
Describe the contract curve.

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Definitions:

Chi-Square Value

A statistic that measures the difference between observed frequencies and the frequencies expected under a specific hypothesis.

Observed Frequency

The actual count of instances or occurrences of a particular category or outcome in a set of data.

Expected Frequency

The number of times an outcome is predicted to occur in a statistical experiment, based on the probabilities of each outcome.

Rule Of Five

A statistical rule stating that if a dataset contains more than five times the sample size of another, the larger can be considered approximately normal in distribution.