a) Draw the Edgeworth box (without indifference curves), with x1 on the horizontal axis. b) The original allocation is such that Arif has two units of x1 and 1 unit of x2. Is this Pareto Optimal? Explain why or why not. (Hint: Remember, the MRS = MUx¡/MUX2, where MU is Marginal Utility) c) Graph the set of bundles which are Pareto Superior to the original allocation.

a) Draw the Edgeworth box (without indifference curves), with x1 on the horizontal axis. b) The original allocation is such that Arif has two units of x1 and 1 unit of x2. Is this Pareto Optimal? Explain why or why not. (Hint: Remember, the MRS = MUx¡/MUX2, where MU is Marginal Utility) c) Graph the set of bundles which are Pareto Superior to the original allocation.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics

Section: Chapter Questions

Problem 1WNG

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