2. Diana and Jennie are stranded on a desert island. Each has in his possession some slices of ham (H) and bread (B). Diana a choosy eater and will eat ham and bread only in the fixed proportions of 2 slices of bread to 1 slice of ham. Her utility function is given by Up = min(H, B/2). Jennie is more flexible in his dietary tastes and has a utility function given by U, = 4H + 3B. Total endowments are 100 slices of ham and 200 slices of bread. %3D a. Draw the Edgeworth box diagram that represents the possibilities for exchange in this situation. What is the only exchange ratio that can prevail in any equilibrium?
2. Diana and Jennie are stranded on a desert island. Each has in his possession some slices of ham (H) and bread (B). Diana a choosy eater and will eat ham and bread only in the fixed proportions of 2 slices of bread to 1 slice of ham. Her utility function is given by Up = min(H, B/2). Jennie is more flexible in his dietary tastes and has a utility function given by U, = 4H + 3B. Total endowments are 100 slices of ham and 200 slices of bread. %3D a. Draw the Edgeworth box diagram that represents the possibilities for exchange in this situation. What is the only exchange ratio that can prevail in any equilibrium?
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.5P
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