Question

co Jane has 11 liters of soft drinks and 8 sandwiches. Bob, on the other hand, has 9 liters of soft drinks and 12 sandwiches. With these endowments, Jane's marginal rate of substitution (MRS) of soft drinks for sandwiches is 4 and Bob's MRS is equal to 2. Draw an Edgeworth box diagram to show whether this allocation of resources is efficient. If it is explain why. If it is not, what changes will make both parties better off? . . . . . 1.) Using the three-point curved line drawing tool, draw an indifference curve for Jane when consuming 11 liters of soft drinks and 8 sandwiches. Label this curve Uj. . . . . . 2.) Using the three-point curved line drawing tool, draw an indifference curve for Bob when consuming 9 liters of soft drinks and 12 sandwiches. Label this curve UB. . Sandwiches . . . . . . . . . . . . 12 Carefully follow the instructions above, and only draw the required objects. . . . . . . . . 11 Jane Coft drinks Click the graph, choose a tool in the palette and follow the instructions to create your graph,

Answer 1

MRS for Jane (4)≠ MRS for BoB (2)

So this is not efficient allocation.

Any allocation which leaves them in the lense shaped area by Point A and B will leave them better off as it is on higher indifference curve.

BOB LOB → SANDWICHES --'12 1. JANE Soft PRINKS soft DRIN - >

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