The economy has two consumers, A and B, and good 1 and 2. The preferences of...

  

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The economy has two consumers, A and B, and good 1 and 2. The preferences of A and B are given by the following utility functions; U^(x,x) = min{(2x₁ + x₁), (x₁ + 2x²)) and U³ (x²₁x) = x² + x². The consumers endowments are (w.) = (12,4) and (w.) =(4,12). a. Using the gridded area below, by making sure to be precise about geometric locations and scales, and by measuring a unit of a good by a single square, (i) draw the Edgeworth Box of the economy and show its dimensions, (ii) mark the initial endowment point, w, (iii) draw the indifference curves of A and B, IA and 1ª, passing through w, and (iv) draw the contract curve for the economy. b. (1) Write down the utility level of A and B at the endowment point, (ii) mark three possible equilibria as E₁, E₂ and E, in the Edgeworth Box. The economy has two consumers, A and B, and good 1 and 2. The preferences of A and B are given by the following utility functions; U^(x,x) = min{(2x₁ + x₁), (x₁ + 2x²)) and U³ (x²₁x) = x² + x². The consumers endowments are (w.) = (12,4) and (w.) =(4,12). a. Using the gridded area below, by making sure to be precise about geometric locations and scales, and by measuring a unit of a good by a single square, (i) draw the Edgeworth Box of the economy and show its dimensions, (ii) mark the initial endowment point, w, (iii) draw the indifference curves of A and B, IA and 1ª, passing through w, and (iv) draw the contract curve for the economy. b. (1) Write down the utility level of A and B at the endowment point, (ii) mark three possible equilibria as E₁, E₂ and E, in the Edgeworth Box.