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(10 points) Two people trade two goods that they cannot produce. Supp.pdf

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(10 points) Two people trade two goods that they cannot produce. Suppose that one Mary's indifference curves are bowed away from the origin - the usual type of curves-but Joe's are concave to the origin. In an Edgeworth box, show that a point of tangency between the two consumers' indifference curves is not a Pareto efficient bundle. (Identify another allocation that Pareto dominates.) Put Mary on the southwest corner and Joe on northeast corner..

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(10 points) Two people trade two goods that they cannot produce. Suppose that one Mary's indifference curves are bowed away from the origin - the usual type of curves-but Joe's are concave to the origin. In an Edgeworth box, show that a point of tangency between the two consumers' indifference curves is not a Pareto efficient bundle. (Identify another allocation that Pareto dominates.) Put Mary on the southwest corner and Joe on northeast corner.

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