Question: please help and show work 1. [14] Morris's utility function over wine and books is UMGJ, w) = b + w and Phillip's is UP

please help and show work

please help and show work 1. [14] Morris's utility function over wine

1. [14] Morris's utility function over wine and books is UMGJ, w) = b + w and Phillip's is UP (b,w) = bw. Morris has an initial endowment ofD 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 xaxis 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 ne}. Hint: For the equations of the indj'erence curves through the endowment, start by calculating utility at the eadowmentpoint than 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

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!