1.a) In an Edgeworth box, draw an indifference curve for Shelly that has a concave

portion in the middle (i.e. she prefers to specialize). Marvin has strictly convex

preferences. Draw an indifference curve for Marvin that is tangent to Shelly's at one

point and intersects her indifference curve at two other points.

b)

Identify the competitive equilibrium in your graph.

Is this allocation Pareto-Efficient?

Explain.

c)

Is your answer to (b) consistent with the First Welfare Theorem? Explain