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a. Assume an economy where there is no production (only exchange). Draw an Edgeworth Box with indifference curves that represent 2 individuals (A and B) whose utility are represented by the following functions: Individual A: UA = min (ax + bx2) Individual B: U = ax + bx b. Explain (you don't have to draw yet) how do you find the contract curve in the Edgeworth Box that you have drawn in part (a). c. Draw the contract curve in the Edgeworth Box that you have drawn in part (a).

a. Assume an economy where there is no production (only exchange). Draw an Edgeworth Box with indifference curves that represent 2 individuals (A and B) whose utility are represented by the following functions: Individual A: UA = min (ax + bx2) Individual B: U = ax + bx b. Explain (you don't have to draw yet) how do you find the contract curve in the Edgeworth Box that you have drawn in part (a). c. Draw the contract curve in the Edgeworth Box that you have drawn in part (a).

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter6: Demand Relationships Among Goods
Section: Chapter Questions
Problem 6.9P
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a. Assume an economy where there is no production (only exchange). Draw an Edgeworth Box with indifference curves that represent 2 individuals (A and B) whose utility are represented by the following functions: Individual A: UA = min (ax + bx2) Individual B: UB = ax + bx b. Explain (you don't have to draw yet) how do you find the contract curve in the Edgeworth Box that you have drawn in part (a). c. Draw the contract curve in the Edgeworth Box that you have drawn in part (a).
Transcribed Image Text:a. Assume an economy where there is no production (only exchange). Draw an Edgeworth Box with indifference curves that represent 2 individuals (A and B) whose utility are represented by the following functions: Individual A: UA = min (ax + bx2) Individual B: UB = ax + bx b. Explain (you don't have to draw yet) how do you find the contract curve in the Edgeworth Box that you have drawn in part (a). c. Draw the contract curve in the Edgeworth Box that you have drawn in part (a).
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