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Economics 440Fall 2016Public FinanceAllen HeadAnswers to Assignment 11a.See Figure 1a:•The box is 5 by 8, reflecting thetotalendowments of goods 1 and 2.•Given their preferences, the households’ indifference curves are linear. In Figure1a, Household 1’s indifference curves are red while those of Household 2 are blue.•The Pareto efficient allocations are along the top and left edges of the box.1b.Consider allocationAin Figure 1a. Allocation A is not Pareto efficient, because alloca-tionA’is Pareto superior to it. Household 1 is indifferent between the two allocations,