Consider a pure exchange economy with two individuals (A and B) and two goods (1 and 2). The utility functions are given by: UAfAM) = min{I1A: 932A}…

how can I caculate the demand and clearning market with these numbers? I found it is a little bit difficult.

1. Consider a pure exchange economy with two individuals (A and B) and two goods (1 and 2). The utility functions are given by: UAffiAflM) = min{I1A: 932A} UB{$1B,$2B) = mifl‘litlB, 2332B} Denote by ml 2 (wlA,w13) and (U2 2 (w2A,w23) the total endowments of good 1 and 2, respectively. Normalize the price of good 1 to l and set p2 = p. (a) Determine the demand of consumer A and consumer B for good 1 and 2 as functions of p and w. (b) Determine the excess demand function of consumer A and of consumer B.(c) Determine the market clearing condition. ((1) Suppose that the endowments are as follows: wl = (8, 2) and {:12 = (l, 5). Whatis the relative price 3) that clears the market? What are the demands of the two consumers? (6) Suppose instead that the endowments are ml 2 (8, 2) and mg 2 (2, 4). What is the relative price 3} that clears the market?

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