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Find Pareto-efficient allocation

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Reference no: EM132392143

Rob Crusoe Problem -

An island has 2 men Robert and Faswal.

And two goods B and C. (Breadfruit and Cacao).

Robert's Endowment = 3B, 2C

Faswal's Endowment = 1B, 6C

They have same utility

uR(BR, CR) = BRCR

uF(BF, CF) = BFCF

(a) Draw Edge worth box and clearly label axes + points.

(b) Draw indifference curves with utility = 6

(c) Find MRS (Marginal rate of substitution) of C for B.

(d)  Find Pareto-efficient allocation.

Mark on graph as "a" points Pareto optimum.

(e) Is Robert with 3B, 6C Pareto efficient?

Must show all steps.

Reference no: EM132392143

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