and + can trade Skippy lives on an island and produces two goods : x anday y. ider PPF (constraint ) is Now she want to trade in the world market. She her utility is Ucxyloxy What ever x and y at price px and py To maximize her gains for to trade she needs to follow 2-step: - First she maximizes her endowment position (maximize trading line) subject to PPF, where the solution to this lagrange problem LXE, YE) is her production decision and are her endowments she will use for trade. PxXE + Pg Y = = Px x* + Py y* - Second, she maximizes utility subject to the constraint, Rose Rouge where and y we the quantities she trades for that maximize her utility. Q1: If px