2.4 Two people trade two goods that they cannot produce. Suppose that one consumers indifference curves are

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2.4 Two people trade two goods that they cannot produce.

Suppose that one consumer’s indifference curves are bowed away from the origin—the usual type of curves—but the other’s are concave to the origin. In an Edgeworth box, show that a point of tangency between the two consumers’ indifference curves is not a Pareto efficient bundle. (Identify another allocation that Pareto dominates.)

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Microeconomics With Calculus

ISBN: 9780273789987

3rd Global Edition

Authors: Jeffrey M. Perloff

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