Economics · Exchange Economy and Walrasian Equilibrium
In a 2-consumer, 2-good exchange economy (Edgeworth Box), the Walrasian (competitive) equilibrium satisfies all of the following EXCEPT:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Excess demand for each good equals zero at the equilibrium price ratio.
- 2The equilibrium necessarily maximises the sum of the two consumers' utilities.✓
- 3The equilibrium allocation lies on the contract curve (Pareto efficient).
- 4Both consumers maximise utility subject to their budget constraints at the equilibrium price ratio.
Correct answer
The equilibrium necessarily maximises the sum of the two consumers' utilities.
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