Two consumers, Budi and Marry, together have 10 apples and 4 oranges. a. Draw the Edgeworth box that shows the set of feasible allocation for the two individuals and two goods b. Suppose Budi has 5 apples and 1 orange, while Marry has 5 apples and 3 oranges. Identify this allocation in the Edgeworth box c. Suppose Budi and Marry have identical utility functions and assume that this utility function exhibits positive marginal utilities for both apples and oranges and a diminishing marginal rate of substitution of apples and oranges. Could the allocation in part (b) be economically efficient?
Two consumers, Budi and Marry, together have 10 apples and 4 oranges. a. Draw the Edgeworth box that shows the set of feasible allocation for the two individuals and two goods b. Suppose Budi has 5 apples and 1 orange, while Marry has 5 apples and 3 oranges. Identify this allocation in the Edgeworth box c. Suppose Budi and Marry have identical utility functions and assume that this utility function exhibits positive marginal utilities for both apples and oranges and a diminishing marginal rate of substitution of apples and oranges. Could the allocation in part (b) be economically efficient?
Chapter6: Demand Relationships Among Goods
Section: Chapter Questions
Problem 6.9P
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Two consumers, Budi and Marry, together have 10 apples and 4 oranges.
a. Draw the Edgeworth box that shows the set of feasible allocation for the two individuals and two goods
b. Suppose Budi has 5 apples and 1 orange, while Marry has 5 apples and 3 oranges. Identify this allocation in the Edgeworth box
c. Suppose Budi and Marry have identical utility functions and assume that this utility function exhibits positive
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