a) Draw the Edgeworth box (without indifference curves), with x1 on the horizontal axis. b) The original allocation is such that Arif has two units of x1 and 1 unit of x2. Is this Pareto Optimal? Explain why or why not. (Hint: Remember, the MRS = MUx¡/MUX2, where MU is Marginal Utility) c) Graph the set of bundles which are Pareto Superior to the original allocation.
a) Draw the Edgeworth box (without indifference curves), with x1 on the horizontal axis. b) The original allocation is such that Arif has two units of x1 and 1 unit of x2. Is this Pareto Optimal? Explain why or why not. (Hint: Remember, the MRS = MUx¡/MUX2, where MU is Marginal Utility) c) Graph the set of bundles which are Pareto Superior to the original allocation.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter20: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 1WNG
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