Author Question: Suppose two coffee snobs who must have their coffee and cream in exact proportions (each cup is 10 ... (Read 125 times)

brutforce · **on:** Jul 1, 2018

Suppose two coffee snobs who must have their coffee and cream in exact proportions (each cup is 10 coffee per 1 unit cream) are invited to a weekend long event (during which they can easily consume 8 cups of coffee). Suppose Snob A is given 8 units of cream and Snob B is given 80 units of coffee. The contract curve in the Edgeworth box would be
a. a right angle connecting the lower left corner with the upper right corner.
b. a curve (not a line) connecting the lower left corner with the upper right corner.
c. a line connecting the lower left corner with the upper right corner.
d. a right angle connecting the upper left corner with the lower right corner.

Question 2

Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade. The men are given food when they walk in and the women are given drink. Suppose they have very different preferences where food and drink provide utility. For men U = FD . For women U=min(F,D) The contract curve in the Edgeworth box using a representative man and woman would be
a. a right angle connecting the lower left corner with the upper right corner.
b. a curve (not necessarily a line) connecting the lower left corner with the upper right corner.
c. a line connecting the lower left corner with the upper right corner.
d. a right angle connecting the upper left corner with the lower right corner.