16.12. Two consumers, Ron and David, together own 1,000 baseball cards and 5,000Pokémon cards. Let xR denote the quantity of baseball cards owned by Ron and yR denotethe quantity of Pokémon cards owned by Ron. Similarly, let xD denote the quantity ofbaseball cards owned by David and yD denote the quantity of Pokémon cards owned byDavid. Suppose, further, that for Ron, MRSRxy = yR/xXR, while for David, MRSPxy = yD/2xD.Finally, suppose xR = 800, yR = 800, xD = 200, and yD = 4,200.a) Draw an Edgeworth box that shows the set of feasible allocations in this simpleeconomy.b) Show that the current allocation of cards is not economically efficient.c) Identify a trade of cards between David and Ron that makes both better off. (Note:There are many possible answers to this problem.)

The dot in the Edgeworth field indicates how many benefits each consumer will receive. Each point in…

16.12. Two consumers, Ron and David, together own 1,000 baseball cards and 5,000 Pokémon cards. Let xR denote the quantity of baseball cards owned by Ron and yR denote the quantity of Pokémon cards owned by Ron. Similarly, let xD denote the quantity of baseball cards owned by David and yD denote the quantity of Pokémon cards owned by David. Suppose, further, that for Ron, MRSRy = yR/XR, while for David, MRS"1y = yD/2xD. Finally, suppose xR = 800, yR = 800, xD = 200, and yD = 4,200. a) Draw an Edgeworth box that shows the set of feasible allocations in this simple economy. b) Show that the current allocation of cards is not economically efficient. c) Identify a trade of cards between David and Ron that makes both better off. (Note: There are many possible answers to this problem.)

16.12. Two consumers, Ron and David, together own 1,000 baseball cards and 5,000 Pokémon cards. Let xR denote the quantity of baseball cards owned by Ron and yR denote the quantity of Pokémon cards owned by Ron. Similarly, let xD denote the quantity of baseball cards owned by David and yD denote the quantity of Pokémon cards owned by David. Suppose, further, that for Ron, MRSRy = yR/XR, while for David, MRS"1y = yD/2xD. Finally, suppose xR = 800, yR = 800, xD = 200, and yD = 4,200. a) Draw an Edgeworth box that shows the set of feasible allocations in this simple economy. b) Show that the current allocation of cards is not economically efficient. c) Identify a trade of cards between David and Ron that makes both better off. (Note: There are many possible answers to this problem.)

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 6PA

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