Suppose there are two individuals and two goods. Preferences are given by u1(x, y) = max{x, y} ad u2(x, y) = xy Suppose that the initial endowment in the economy is (10, 10)
Argue that there is an allocation that satisfies the following 3 properties simultaneously:
(a) In the allocation, 1 gets her best among feasible allocations, while 2 gets his worst among feasible allocations.
(b) The allocation is Pareto efficient.
(c) The allocation is even envy-free!