Jane has 9 liters of soft drinks and 11 sandwiches. Bob, on the other hand, has 11 liters of soft drinks and 9 sandwiches. At these endowments, Jane's MRSds of soft drinks for sandwiches is 0.8 and Bob's MRSds is 2.3. a) Illustrate the situation in the E-box. Which of the following graphs represents the situation correctly? [Select] sandwiches 0₂ sandwiches Graph b 0₂ soft drinks 0₂ soft drinks b) Is this allocation efficient? [Select] c) If allocation is not efficient, what changes will make both consumers better off? [Select] For question (a), choose one answer from "graph a" and "graph b" For question (b), choose one answer from "yes" and "no" For question (c), choose one answer from "Jane should trade some of her soft drinks for Bob's sandwiches","Jane should trade some of her sandwiches for Bob's soft drink" and "It is already efficient" 11 11 Graph a

Jane has 9 liters of soft drinks and 11 sandwiches. Bob, on the other hand, has 11 liters of soft drinks and 9 sandwiches. At these endowments, Jane's MRSds of soft drinks for sandwiches is 0.8 and Bob's MRSds is 2.3. a) Illustrate the situation in the E-box. Which of the following graphs represents the situation correctly? [Select] sandwiches 0₂ sandwiches Graph b 0₂ soft drinks 0₂ soft drinks b) Is this allocation efficient? [Select] c) If allocation is not efficient, what changes will make both consumers better off? [Select] For question (a), choose one answer from "graph a" and "graph b" For question (b), choose one answer from "yes" and "no" For question (c), choose one answer from "Jane should trade some of her soft drinks for Bob's sandwiches","Jane should trade some of her sandwiches for Bob's soft drink" and "It is already efficient" 11 11 Graph a

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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