Assignment 1 Micro Economic Theory II: General Equilibrium Theory 1.

Consider a pure exchange environment in which preference relation i , for each consumer i, can be represented by a utility function ui : RL + R . Let A denote the set of all feasible allocations. Give a denition of Pareto eciency in terms of the utility functions. Suppose that a feasible allocation (x i )i satises () (xi )i maximizes I i ui (xi ) subject to (xi )i A, for some RI ++ . Is (xi )i necessarily Pareto ecient? Give a proof or counter example.
I Suppose that a feasible allocation (x i )i satises () for some R+ such that = 0. Is (xi )i necessarily Pareto ecient? Give a proof or counter example.

Same as (c), but assume that each consumers preferences are locally non satiated and continuous 2. Consider a pure exchange environment with two commodities and two consumers, in whoch the preference relation i , for each consumer i, can be represented by the utility function ui (x) = M in{x1i , x2i } where i > 0i. Characterise the set of Pareto ecient allocations. 3. Consider a pure exchange environment with two commodities and two consumers, in whoch the preference relation i , for each consumer i, can be represented by the utility function u1 (x11 , x12 ) = 2x11 + x21

u2 (x21 , x22 ) = x12 + 2x22 where i > 0i. Characterise the set of Pareto ecient allocations.