Question

Consider a pure exchange 2x2 edgeworth box economy model. Each consumer is endowed with one unit of each good. Consumer A has (strictly) monotonic preferences over good y and is otherwise indifferent between any levels of good x.

The preferences for consumer B are given by Ub (x, y) = x + y

From consumer A's perspective (so that A's origin is in the bottom left corner of the box with good y measured on the vertical axis and good x measured on the horizontal axis), which of the following coordinates in the box would be contained in the pareto efficient set? (check all that applies)

1) (0, 0)

2) (0, 1/2)

3) (2, 2)

4) (0, 3/2)

Please don't answer if answered before thanks!

Answer 1