Tutorial assignment 5

Tutorial assignment 5 - Tutorial assignment 5 Due at the...

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Tutorial assignment 5 Due at the beginning of your tutorial on week 6 1. Irene and Orville live in an isolated valley and trade with no one but each other. They consume only cantaloupes and grapefruits. Irene has an initial endowment of 5 cantaloupes and 12 grapefruits. Orville has an initial endowment of 19 cantaloupes and 25 grapefruits. For Irene, the two goods are perfect substitutes, one for one. For Orville, they are perfect complements, one for one. Assume the fruits are not divisible. a. Describe all Pareto efficient allocations in this economy. b. Which of these Pareto efficient allocations are in the Core? 2. Avi (A) and Bindi (B) have the following utility functions () 1/2 2 , , A A A B BB UXY UX Y = = where the initial endowments of X and Y are as follows 16,
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