Question: Please make the graphs and be clear about how they were plotted! Two consumers, A and B have preferences over two goods T and K
Please make the graphs and be clear about how they were plotted!
Two consumers, A and B have preferences over two goods T and K
Bs preferences are represented by uTK minKT
As preferences are represented by uTK minT K T K TK
Suppose that total endowments are wTwK and initially A is endowed with The rest is in Bs hands.
Questions:
a Represent this in an Edgeworth box with O in the lower left corner with T on the xaxis and K on the yaxis. Find an expression for the contract curve and plot it
b Find an expression for the core in this economy and plot your answer.
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