Question: I don't understand the second question in part a) ii). Any help explaining this would be greatly appreciated. 1. [14] Morris's utility function over wine

I don't understand the second question in part a) ii). Any help explaining this would be greatly appreciated.

I don't understand the second question in part a) ii). Any help

1. [14] Morris's utility function over wine and books is UM(b,w) = b + w and Phillip's is UP(b,w) = bw. Morris has an initial endowment of 60 books and 10 bottles of wine. Philip has an initial endowment of 20 books and 30 bottles of wine. They have no other assets and make no trades with anyone other than each other. a. [8] Draw an Edgeworth Box diagram with books on the x-axis and wine on the yaxis. i. [2] Label axes carefully as well as the endowment. ii. [6] Find the equations of their indifference curves through the endowment point. Add the indifference curves of Morris and Phillip that go through the endowment to your diagram (a rough sketch is fine). Hint: For the equations of the indifference curves through the endowment, start by calculating utility at the endowment point then isolate demand for wine. b. [2] Add the contract curve (the locus of Pareto efficient allocations) to your diagram. c. [4] Solve for the competitive allocation

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