Please help me do (f) and (g), the answers in bold might not be
correct. Thank you very much! I really appreciate it!
Please Help Me Do F And G The Answers In Bold Might Not Be Correct Thank You Very Much I Really Appreciate It 1 (43.23 KiB) Viewed 44 times
29.3 (0) Dean Foster Z. Interface and Professor J. Fetid Nightsoil ex- change bromides and platitudes. Dean Interface's utility function is U₁(B1, P1) = B₁ +2√/P₁. Professor Nightsoil's utility function is UN (BN, PN) = BN + 4√/PN. 362 EXCHANGE (Ch. 29) Dean Interface's initial endowment is 8 bromides and 12 platitudes. Pro- fessor Nightsoil's initial endowment is 8 bromides and 4 platitudes.
(f) In the Edgeworth box, label the initial endowment with the letter E. Dean Interface has thick gray penciled indifference curves. Profes- sor Nightsoil has red indifference curves. Draw a few of these in the Edgeworth box you made. Use blue ink to show the locus of Pareto op- timal points. The contract curve is a (vertical, horizontal, diagonal) horizontal line in the Edgeworth box. (g) Find the competitive equilibrium prices and quantities. You know what the prices have to be at competitive equilibrium because you know what the marginal rates of substitution have to be at every Pareto optimum. P₁ = 3.2, PN = 12.8, platitude price/bromide price = 1 √3.2
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