Consider the potential voluntary exchange between two

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Consider a potential, voluntary exchange between two people. Assume that both have complete info about each other's preferences and that there are no transaction costs. Consumers A and B have between them 9 units of X and 15 units of Y. initially, A has 6 of X and 10 of Y and B has 3 of X and 5 of Y. Consumers A's marginal rate of substitution of X for Y is 2 and B marginal rate of substitution of X for Y is 1/3.

A) is there room for a mutually beneficial, voluntary exchange?

B) if so, determine which consumer would trade for more X and which for more Y

C) if trade takes place! can you explain the terms of trade?

Reference no: EM13388940

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