4月 2020

Answers to Assignment 1
1a. See Figure 1a:
• The box is 5 by 7, reflecting the total endowments of goods 1 and 2. • Given their preferences, the households’ indifference curves are linear.

In Figure 1a, Household 1’s indifference curves are blue while those of Household 2 are red.
• The Pareto efficient allocations are along the bottom and right edges of the box.