Two people trade two goods that they cannot produce. Suppose that one consumers indifference curves are bowed
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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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Related Book For
Microeconomics Theory And Applications With Calculus
ISBN: 9780133019933
3rd Edition
Authors: Jeffrey M. Perloff
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