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Consider a consumer with the utility function u(x,y) = √x +y Suppose the cost producing good...

  1. Consider a consumer with the utility function u(x,y) = √x +y Suppose the cost producing good x is given by the cost function c(x) and the price of good y is $1 Illustrate that the solution to the social planner’s problem in terms of production of x is equivalent to the perfectly competitive market outcome. (You may assume that the consumer is endowed with an income of M>0)
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