Suppose that Jane and Denise live neal each other in the wilds of Massachusetts. A nasty snowstorm hits, isolating them. They must either trade with each other or consume only what they have at hand.

Collectively, they have 3 units of firewood (F) and 3 units of candv (C) and no way of producing more of either good.

Jane's endowment (her initial allocation of goods) is one unit of candy and two units of firewood; Denise' s endowment is two units of candv and one unit of firewood:

Jane and Denise's utilitv functions are given as below:

\fW J ( wf, wf ) = (1,2 ) WJ (wf, w/ ) = (1,2) Jane and Denise's utility functions are given as below: WJ = (wf.wf ) = (1,2 ) WI =(wf.w/ )= (1,2 )