Jack Sparrow and his wife consume wine (W) and books (B). Jack Sparrow's utility function is Ujack(W, B)= B. His wife's utility function is Uwife(W, B) - W. Jack's endowment is 26 bottles of wine and 12 books and Jack's wife's endowment is 11 bottles of wine and 17 books. In the Edgeworth box, Jack's consumption is measured from the lower left corner, and his wife's from the upper right corner of the box; the wine is on the horizontal axis and books are on the vertical axis. Therefore, in an Edgeworth box for Jack and his wife, there is only one Pareto Optimal allocation that is located in the top left corner of the box. True or False?

Jack Sparrow and his wife consume wine (W) and books (B). Jack Sparrow's utility function is Ujack(W, B)= B. His wife's utility function is Uwife(W, B) - W. Jack's endowment is 26 bottles of wine and 12 books and Jack's wife's endowment is 11 bottles of wine and 17 books. In the Edgeworth box, Jack's consumption is measured from the lower left corner, and his wife's from the upper right corner of the box; the wine is on the horizontal axis and books are on the vertical axis. Therefore, in an Edgeworth box for Jack and his wife, there is only one Pareto Optimal allocation that is located in the top left corner of the box. True or False?

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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just question 1
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Jack Sparrow and his wife consume wine (W) and books (B). Jack Sparrow's utility function is Ujack(W, B) = W. His wife's utility function is Uwife(W, B) = B. Jack's endowment is 17 bottles of wine and 5 books and Jack's wife's endowment is 20 bottles of wine and 14 books. In the Edgeworth box, Jack's consumption is measured from the lower left corner, and his wife's from the upper right corner of the box; the wine is on the horizontal axis and books are on the vertical axis. Therefore, in an Edgeworth box for Jack and his wife, there is only one Pareto Optimal allocation that is located in the top left corner of the box. True or False? Please submit 1 if True and O if False.