Using an Edgeworth Box diagram, with peanut butter on the horizontal axis, and jelly on the vertical axis, please draw show how a set of prices can result in there being an excess supply of peanut butter and an excess demand for jelly, and Explain why this is not a competitive equilibrium.

What will have to happen to peanut butter and jelly prices for there to be a competitive equilibrium? 

 

Is a competitive equilibrium also Pareto efficient? How do you know?

Answer rating: 100% (QA)

Without an image interface it is difficult to draw the Edgeworth Box diagram here However I can expl... View the full answer