Question
18 total points) Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A's utility function is given by: UA(X,Y)
18 total points) Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A's utility function is given by: UA(X,Y) = X + 4Y, And consumer B's utility function is given by UB(X,Y) = 2X + Y. The initial endowments are: A: X = 4; Y = 2 B: X = 4; Y = 6 a) (12 points) Using an Edgeworth Box, graph the initial allocation (label it "W") and draw the indifference curve for each consumer that runs through the initial allocation. Be sure to label your graph carefully and accurately. b) (6 points) On your graph from part a), using a highlighter, identify the core.
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