Initial endowment in the economy

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Suppose there are two individuals and two goods. Preferences are given by u1(x, y) = max{x, y} ad u2(x, y) = xy Suppose that the initial endowment in the economy is (10, 10)

Argue that there is an allocation that satisfies the following 3 properties simultaneously:

(a) In the allocation, 1 gets her best among feasible allocations, while 2 gets his worst among feasible allocations.

(b) The allocation is Pareto efficient.

Reference no: EM131805645

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