Jane has 3 liters of drinks and 9 sandwiches. Bob on the other hand has 8 liters of drinks and 4 sandwiches. With these endowments, Jane’s MRS DS is 4 and Bob’s MRS DS is equal to 2.
1.Draw an Edgeworth box diagram to show whether this allocation of resource is efficient.
2.If it is explain why.
3.If it is not what exchanges will make both parties better off