Consider a 2x2 pure exchange Edgeworth box economy. Consumer A’s preferences are given by Ua(x, y)...

Consider a 2x2 pure exchange Edgeworth box economy. Consumer A’s preferences are given by Ua(x, y) = min(x, y)

Consumer B’s preferences are given by Ub(x, y) = y + x

Both consumers are endowed with 1 unit of x and 2 units of y.

Which of the following identifies the set of Pareto efficient allocations that are feasible given the dimensions of the Edgeworth box?

Yb = Xb
The set of points where Ya = Xa as well as the points on the edge of the box where Xa = 2 and Ya > 2
Ya = Xa
The set of points where Yb = Xb as well as the points on the edge of the box where Xb = 2 and Yb > 2

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Expert Solution

Rahul Sunny answered 1 year ago

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