Suppose that David and his friend Wilson derive utility from consuming two types of snacks:onion rings (9₁) and chips (9₂). The utility function for each individual is U (9₁, 92) = 9192.Their indifference curves for these two goods are assumed to have the usual (convex) shape.Suppose David has an initial endowment of 35 onion rings and 10 chips, and Wilson's initialendowment consists of 5 onion rings and 20 chips.(1) Draw an Edgeworth box and show the initial allocation of goods, to be labelled e.Indicate the initial quantities of each person's goods on the four axes.

Here the lower left hand side corner is the point of origin for David and the top right hand corner…

Answered: (1) Draw an Edgeworth box and show the…

(1) Draw an Edgeworth box and show the initial allocation of goods, to be labelled e. Indicate the initial quantities of each person's goods on the four axes.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose that David and his friend Wilson derive utility from consuming two types of snacks:
onion rings (9₁) and chips (9₂). The utility function for each individual is U (9₁, 92) = 9192.
Their indifference curves for these two goods are assumed to have the usual (convex) shape.
Suppose David has an initial endowment of 35 onion rings and 10 chips, and Wilson's initial
endowment consists of 5 onion rings and 20 chips.
(1) Draw an Edgeworth box and show the initial allocation of goods, to be labelled e.
Indicate the initial quantities of each person's goods on the four axes.

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