ECON4211 Problem Set 1 Please write legibly, showing all work . Circle all answers Complete all work on this handout, attaching additional pages if necessary You will work in groups of 3-4 Chapter 3 1 Your airplane crashes in the Pacific Ocean. You land on a desert island with one other passenger. A box containing 100 little bags of peanuts also washes up on the island. The peanuts are the only thing to eat. In this economy with two people. one commodity, and no production, represent the possible allocations in a diagram, and explain why every allocation is Pareto efficient. Is every allocation fair? 2. Suppose that Tang and Wilson must split a fixed 400 pounds of food between them. Tang's utility function is Ur = squt (F1 ) and Wilson's utility function is Uw =1/ squt (F2). where Fi and F2 are pounds of food to Tang and Wilson, respectively. a. How much utility will Tang and Wilson receive if the food is distributed evenly between them? b. If the social welfare function is Up + Uw. then what distribution of food between Tang and Wilson maximizes social welfare