17. In a two person-two good economy, goods X and Y are perfect complements for John and Mary. There are 12 units of X and 6 units of Y available. Initially, John has 8 units of X and 2 units of Y and Mary has 4 units of X and 4 units of Y. (a) Draw an Edgeworth Box associated with this economy. Show the initial allocation and plot the indifference curves for both John and Marry that pass through the initial allocation point. (b) Is the initial allocation pareto efficient? Discuss. (c) Find the set of pareto efficient allocations and show it on the Edgeworth Box.
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The horizontal axis represents the quantity of good X, and the vertical axis represents the quantity of good Y. The origin for John is at the bottom left corner of the box, and the origin for Mary is at the top right corner. The total quantity of good X is Show more…
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