Both Omar and Zaid have an initial endowment of the same two goods. Omar has relatively more
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Both Omar and Zaid have an initial endowment of the same two goods. Omar has relatively more of Good 1 and his indifference curves are convex to the origin. In contrast, Zaid's indifference curves are concave to the origin. Can both Omar and Zaid benefit from voluntary trade? If so, will their trade result in a Pareto efficient allocation in which each has a positive quantity of both goods? (Consider the relative slopes of the indifference curves.)
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Yes both Omar and Zaid can benefit from voluntary trade despite having different preferences represe...View the full answer
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