Q.5 Suppose that the production of goods X and Y is described using the production functions: X = BL, K, Y = (2/L, +2/K, )x. Determine the competitive equilibrium and the social equilibrium. Also...

Extracted text: Q.5 Suppose that the production of goods X and Y is described using the production functions: X = BL, K, Y = (2/L, +2/K, )x. Determine the competitive equilibrium and the social equilibrium. Also calculate the rate of the Pigouvian subsidy to correct for the misallocation of resources under competitive equilibrium.