Anil and Boris meet one day and decide the only thing they are missing in life...

 

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Anil and Boris meet one day and decide the only thing they are missing in life is the other person's good. Anil considers kale as 1:1 substitutable for other goods, so his utility is UA(d,k)=eªk, but Boris finds doughnuts more pleasurable, so his utility changes to UB(d,k) = 20k-2k²+d² Assume Anil and Boris each arrive with a full day's allocation of their primary good (doughnuts and kale), and nothing else. Draw the Edgeworth box for Anil and Boris, and identify the initial position. What is the optimal quantity of doughnuts and kale for each person once they trade? Note that doughnuts and kale are infinitely divisible (i.e.: not constrained to be integers). What is the new established price ratio between kale and doughnuts (Pk/Pd)? Anil and Boris meet one day and decide the only thing they are missing in life is the other person's good. Anil considers kale as 1:1 substitutable for other goods, so his utility is UA(d,k)=eªk, but Boris finds doughnuts more pleasurable, so his utility changes to UB(d,k) = 20k-2k²+d² Assume Anil and Boris each arrive with a full day's allocation of their primary good (doughnuts and kale), and nothing else. Draw the Edgeworth box for Anil and Boris, and identify the initial position. What is the optimal quantity of doughnuts and kale for each person once they trade? Note that doughnuts and kale are infinitely divisible (i.e.: not constrained to be integers). What is the new established price ratio between kale and doughnuts (Pk/Pd)?