ps9x313_s06 - Econ 313 - Wissink Spring 2006 PS#9 XtraQ...

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1) Recall Abe and Betty from the Wissink web-workbook problem set PS99 Q2. That is, suppose u Abe = min{2F, IC} and u Betty = min {1F, 1C}. Assume total food available is F = 100 and total clothing available is C = 50. a) What allocations of food and clothing are on the "contract curve" in the Edgeworth-box for Abe and Betty? b) What allocations of food and clothing are on the "core" in the Edgeworth-box for Abe and Betty? c) Transcribe the allocations in your Edgeworth Box into a detailed utility possibilities frontier diagram. d) Suppose now that we agree that social welfare should be measured with the following function: W society = utility Abe + utility Betty . What allocation/allocations on your utility possibilities frontier in part (c) would maximize this social objective function? e) Suppose now that we agree that social welfare should be measured with the following function: W society = min{utility Abe , utility Betty }. What allocation/allocations on your utility possibilities frontier in part (c) would maximize this social objective function? 2)
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