10. Abel, Baker, and Charlie are identical triplets with identical tastes. The utility they get from consuming various amounts of bacon, eggs, and cheese is summarized in the following table:

Thus, if Abel has 4 pieces of bacon and 3 eggs, his total utility will be 190 + 150, or 340.

a. Suppose that Abel initially has 5 pieces of bacon, Baker has 5 eggs, and Charlie has 5 pieces of cheese. Assuming that bacon, eggs, and cheese all trade one-for-one in the marketplace, suggest a series of Paretoimproving trades that will raise everyone’s overall utility.

b. What allocation does each end up with when all gains are exhausted?

c. Show that once all gains are exhausted, if we force Abel to trade any of his goods for any of Baker’s goods, neither will be made better off, and at least one will be made worse off.

Transcribed Image Text:

# of Units Utility Utility Utility from from from Consumed Bacon Eggs Cheese 1 100 60 80 2 155 110 135 3 175 150 183 5 190 180 210 5 200 200 225