Consider an exchange problem in which 10 units of x and 5 units of y are to be allocated between persons A and B. In separate Edgeworth box diagrams, depict (draw) each of the following and explain your diagram. an inefficient allocation (b) a Pareto efficient allocation
Consider an exchange problem in which 10 units of x and 5 units of y are to be allocated between persons A and B. In separate Edgeworth box diagrams, depict (draw) each of the following and explain your diagram. an inefficient allocation (b) a Pareto efficient allocation
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:1. Consider an exchange problem in which 10 units of x and 5 units of y are to be allocated between
persons A and B. In separate Edgeworth box diagrams, depict (draw) each of the following and
explain your diagram.
(a) an inefficient allocation
(b) a Pareto efficient allocation

Transcribed Image Text:3. State whether the following is true, false or uncertain and explain:
In an exchange economy with only two goods, x and y, if prices px
equilibrium prices, then so are p = 6 and p'y = 3.
=
2 and Py =
1 are competitive
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