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Amy and Louis are the only people living in a village. They consume only two goods, apples (a) and bananas (b). Amy has an initial
Amy and Louis are the only people living in a village. They consume only two goods, apples (a) and bananas (b). Amy has an initial endowment of 40 apples and 30 bananas. Louis has an initial endowment of 55 apples and 50 bananas. Amy's utility function is uA(x A a , xA b ) = min{x A a , xA b } and Louis utility function is uB(x B a , xB b ) = min{x B a , xB b }. Is the initial allocation be Pareto efficient? Explain your answer
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