Problem
Two consumers, Josh and Mary, together have 10 apples and 4 oranges.
a) Draw the Edgeworth box that shows the set of feasible allocations that are available in this simple economy.
b) Suppose Josh has 5 apples and 1 orange, while Mary has 5 apples and 3 oranges. Identify this allocation in the Edgeworth box.
c) Suppose Josh and Mary have identical utility functions, and assume that this utility function exhibits positive marginal utilities for both apples and oranges and a diminishing marginal rate of substitution of apples for oranges. Could the allocation in part (b)-5 apples and 1 orange for Josh; 5 apples and 3 oranges for Mary-be economically efficient?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.