Consider a pure-exchange general equilibrium model with two consumers, two goods and an initial endowment. Assuming that consumers have convex preferences, a Pareto improvement can be achieved through exchange: As long as indifference curves associated with the endowment are tangent to each other on the Edgeworth box. а. b. As long as indifference curves associated with the endowment are not tangent to each other on the Edgeworth box. C. Only when one of the consumers has no endowment of one of the goods. d. Only when the initial endowment is on the contract curve.

Consider a pure-exchange general equilibrium model with two consumers, two goods and an initial endowment. Assuming that consumers have convex preferences, a Pareto improvement can be achieved through exchange: As long as indifference curves associated with the endowment are tangent to each other on the Edgeworth box. а. b. As long as indifference curves associated with the endowment are not tangent to each other on the Edgeworth box. C. Only when one of the consumers has no endowment of one of the goods. d. Only when the initial endowment is on the contract curve.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.9P

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