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Find a pareto efficient allocation

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1. Consider an economy with two consumers whose preferences are represented by utilityfunctionsU1= min{x1, y1}andU2= 2x2+y2and the aggregate endowment of 4 units ofxand 3 units ofy.

(a) Find a Pareto efficient allocation and depict it in an Edgeworth box, carefullylabel the allocation as a point and each consumer's indifference curves at thatpoint.

Hint: You can't find MRS for perfect complements, solve the problem by findingan optimality condition for consumer 1 and carefully drawing both consumers'indifference curves in an Edgeworth box.

(b) Is there a Pareto efficient allocation in which one consumer has all of the goods?Prove your assertion.

Reference no: EM133083034

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