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Consider two consumers in an exchange framework




5(b) Consider two consumers in an exchange framework. Caroline likes apples and hates bananas. Georgina likes both apples and bananas. Both of them have convex preferences. Caroline?s initial endowment is 10 apples and 5 bananas. Georgina?s initial endowment is 5 bananas and 10 apples.;i. Draw an Edgeworth box with apples on the horizontal axis. Label the initial;endowment point W.;ii. Sketch two representative indifference curves for each person.;iii. Show where on your diagram the Pareto optimal allocations are.;Page 3


Paper#27956 | Written in 18-Jul-2015

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