Consider an exchange economy with two people a and b and


Consider an exchange economy with two people, A and B, and two commodities, food (x) and water (y). A's and B's preferences are described, respectively, by the following utility functions: . u A ( Xa , Ya ) = (Xa)^ 2 ( Ya ) , MRS ( Xa , Ya ) = (2y^a)/(xA) u B ( Xb,Yb ) = ( Xb) ( Yb) ^2 , MRSb ( Xb,Yb ) =(Ya)/(2xa) Suppose there are 6 units of x and 6 units of y ove rall. Draw an Edgeworth box for this economy. Determine whether each of the fol lowing allocations is (i) feasible, (ii) Pareto efficient a. ( (2,4), (4,2) ) b. ( (4,2), (2,4) ) c. ( ( 8 / 3 , 1 ), ( 10/3 , 5 ) )

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Business Economics: Consider an exchange economy with two people a and b and
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