Ken and Daniel always eat miso soup and sushi in exact proportions – one miso per twosushi. 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 4 miso soups and 10 sushi with him; Daniel had 6 miso and 6 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 sushi on horizontal axis and miso on vertical. Show their endowment point.
b) Show all Pareto optimal allocations of miso and sushi between Ken and Daniel in the Edgeworth Box. Please note that this question is a bit tricky, though not difficult.
Draw a bunch of indifference curves and look for tangencies.
Your answer to this question should include the Edgeworth box with it size shown and all Pareto optimal allocations clearly identified