Question
Ken and Daniel always eat miso soup and sushi in exact proportions: Ken eats one miso per two sushi; Daniel eats two miso per one
Ken and Daniel always eat miso soup and sushi in exact proportions: Ken eats one miso per two sushi; Daniel eats two miso per one sushi. They throw away any extra soup or sushi as it would not give them any pleasure. Once, they were stuck in the office together for hours, marking students' assignments. Ken had ten miso soups and two sushi with him; Daniel had two miso and ten sushi. (For the purpose of this question, assume that miso and sushi can be divided into little pieces so one-half miso or one-hundredth of sushi makes sense) a) Draw the Edgeworth box for Ken and Daniel. Please put Ken at the origin and Daniel "upside down"; put miso on the horizontal axis and sushi on the vertical one. Show their endowment point. b) Show all Pareto optimal allocations of miso and sushi between Ken and Daniel in the Edgeworth Box. You can use the graph from a). Please note that this question is a bit tricky, though not difficult. Draw a bunch of indifference curves and look for "tangencies".
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