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Question: Consider an economy that only produces hamburger patties (H) and onions (O). There are two consumers Ron and Dave. Ron likes to consume his hamburger patties and onions in a 1:1 ratio, while Dave likes two onions for every hamburger patty. Currently, there are 10 onions and 5 hamburger patties produced in the economy and Ron has 6 onions and 2 hamburger patties. *
(a) Draw an Edgeworth Box diagram summarising the above information.
(b) Draw the indifference curves for Ron and Dave in the Edgeworth Box.
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Find the possible ranges of the market interest rate in the three scenarios below and discuss who is in the market and who is driven out of the market.
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