- Please Only Answer Question D 1 (1.17 MiB) Viewed 12 times
4. Consider the Edgeworth box below, for two individuals (Aisha and Betty) and two goods (apples and oranges). You have to understand which indifference curves below to Aisha (and which to Betty) by their shape, knowing that they are two Homo Economicus and they both get positive and diminishing marginal utility from apples and oranges. Answer the following questions: (a) Indicate the point in the graph where Aisha would achieve the maximum utility (using marker A). Similarly, indicate the point in the graph where Betty would achieve maximum utility (using marker B). A's Oranges, y 2 3 4 5 6 7 8 9 10 11 12 13 14 1 10 HTTTTT 9 w 4 4 8 INI 7 B's Apples, x 6 4 to A's Apples, x 2 155 OLECYSOLOLIL 2 B's Oranges, y
(d) Assume that Aisha has price-setting power. Describe (a) how the interaction will unfold (b) the features of the outcome in terms of efficiency and equity.