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Calculate all the pareto efficient allocations (part of the this question) Problem 7 (Edgeworth Box) One of our main goals for the course is to
Calculate all the pareto efficient allocations (part of the this question)
Problem 7 (Edgeworth Box) One of our main goals for the course is to become skilled at differentiating between policies targeting efficiency of markets versus equity. The Edgeworth Box model is a helpful beginner's way of conceptualizing this, focusing on exchange and holding production constant. This question reviews the Edgeworth Box concept, which should be familiar to students from their micro theory coursework. We will retum to these concepts in real-life applications later in the course. Suppose there are two types of individuals A, B, and two types of goods x, y. There are a total of 50 units of x and 100 units of y in the economy. LIA (x, y) = X * y and UB(x,y) = X * y. The fundamental economic question is how to divide goods x and y among the two types of people in the economy. a) Draw the Edgeworth Box. b) Calculate and list all of the Pareto Efficient allocations in this economy. What does it mean for these allocations to be Pareto Efficient allocations? (In plain English.)
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