Eric and Anton are stranded on a desert island. They have shelter and fire in abundance, but food is scarce. After some scavenging Eric managed to find two pounds of nuts and four pounds of fruit. Anton found nine pounds of fruit and one pound of nuts. They have identical utility functions: U(F, N) = FN

a )Draw an Edgeworth box representing the total food they have to trade and mark their initial endowment. Put Eric on the bottom left, with fruit on the x-axis.

b) Calculate the men's utility levels at the endowment, then draw indifference curves at those levels from the endowment through to the rest of the box.

c )Lightly shade in all areas which would be a Pareto improvement from the current allocation.

d )Calculate the MRSs for each and use them to find the contract curve.

e) Find an expression for the slope of a line between the endowment and a given point on the contract curve.

f )Find an expression for the MRS at a given point on the contract curve.

g) Use (e) and (f) to find the competitive equilibrium on the island.