Draw a diagram of an Edgeworth box for a two-consumer exchange economy, where both consumers have...

 

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Draw a diagram of an Edgeworth box for a two-consumer exchange economy, where both consumers have strictly convex preferences. Choose an initial endowment point. a. b. C. Represent a competitive equilibrium in the Edgeworth box, explaining the diagram. Explain with the aid of your diagram why the competitive equilibrium is Pareto efficient. (40%) Why does an exchange economy in which consumers have strictly convex preference over bundles of two goods have a competitive equilibrium? Explain with the aid of your diagram. (40%) Is endowment allocation the only feasible way to allocate goods in two markets? Briefly discuss. (20%) Draw a diagram of an Edgeworth box for a two-consumer exchange economy, where both consumers have strictly convex preferences. Choose an initial endowment point. a. b. C. Represent a competitive equilibrium in the Edgeworth box, explaining the diagram. Explain with the aid of your diagram why the competitive equilibrium is Pareto efficient. (40%) Why does an exchange economy in which consumers have strictly convex preference over bundles of two goods have a competitive equilibrium? Explain with the aid of your diagram. (40%) Is endowment allocation the only feasible way to allocate goods in two markets? Briefly discuss. (20%)

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1Introduction So in two aspects with stringently monotonic inclinations thats what severe convexity says assuming two utilization groups are each on a similar lack of concern bend as x then at that po... View the full answer