4 Consider The Edgeworth Box Below For Two Individuals Aisha And Betty And Two Goods Apples And Oranges You Have 1 (1.17 MiB) Viewed 11 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
(e) Now imagine a situation in which Aisha and Betty delegate an Impartial spectator to choose an allocation for them. They give the Impartial Spectator the power to impose any allocation that she/he considers best for society. The Impartial Spectator is omniscient (he/she knows everything) and wants to do what is collectively best for Aisha and Betty. What will the Impartial Spectator do?
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!