Ken and Daniel always eat miso soup and sushi in exact proportions: Ken eats two miso per one sushi; Daniel eats one miso per one sushi. They throw away any extra soup or sushi as it would not give them any pleasure. Once, they were stuck in the office together for hours, marking students' assignments. Ken had one miso soup and 9 sushi with him; Daniel had 9 miso and one sushi. (For the purpose of this question, assume that miso and sushi can be divided into little pieces, so one-half miso or one-hundredth of sushi makes sense) a) Draw the Edgeworth box for Ken and Daniel. Please put Ken at the origin and Daniel "upside down"; put miso on the horizontal axis and sushi on the vertical one. Show their endowment point. b) Show all Pareto optimal allocations of miso and sushi between Ken and Daniel in the Edgeworth Box. You can use the graph from a). Please note that this question is a bit tricky, though not difficult. Draw a bunch of indifference curves and look for "tangencies".

Ken and Daniel always eat miso soup and sushi in exact proportions: Ken eats two miso per one sushi; Daniel eats one miso per one sushi. They throw away any extra soup or sushi as it would not give them any pleasure. Once, they were stuck in the office together for hours, marking students' assignments. Ken had one miso soup and 9 sushi with him; Daniel had 9 miso and one sushi. (For the purpose of this question, assume that miso and sushi can be divided into little pieces, so one-half miso or one-hundredth of sushi makes sense) a) Draw the Edgeworth box for Ken and Daniel. Please put Ken at the origin and Daniel "upside down"; put miso on the horizontal axis and sushi on the vertical one. Show their endowment point. b) Show all Pareto optimal allocations of miso and sushi between Ken and Daniel in the Edgeworth Box. You can use the graph from a). Please note that this question is a bit tricky, though not difficult. Draw a bunch of indifference curves and look for "tangencies".

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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