Elizabeth Swann and her husband consume wine (W) and books (B). Elizabeth's utility function is UE(W, B) = W. Her husband's utility function is UH(W, B) = W. Elizabeth endowment is 16 bottles of wine and 5 books and her husband's endowment is 19 bottles of wine and 14 books. In the Edgeworth box, Elizabeth's consumption is measured from the lower left corner, and her husband's from the upper right corner of the box; the wine is on the horizontal axis and books are the vertical axis.

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Chapter1: Making Economics Decisions
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Elizabeth Swann and her husband consume wine (W) and books (B).
Elizabeth's utility function is UE(W, B) = W. Her husband's utility function is UH(W, B) = W. Elizabeth's
endowment is 16 bottles of wine and 5 books and her husband's endowment is 19 bottles of wine
and 14 books.
In the Edgeworth box, Elizabeth's consumption is measured from the lower left corner, and her
husband's from the upper right corner of the box; the wine is on the horizontal axis and books are on
the vertical axis.
Therefore, in an Edgeworth box for Elizabeth and her husband, any allocation is Pareto Optimal. True
or False?
Please submit 1 if True and O if False.
Transcribed Image Text:Elizabeth Swann and her husband consume wine (W) and books (B). Elizabeth's utility function is UE(W, B) = W. Her husband's utility function is UH(W, B) = W. Elizabeth's endowment is 16 bottles of wine and 5 books and her husband's endowment is 19 bottles of wine and 14 books. In the Edgeworth box, Elizabeth's consumption is measured from the lower left corner, and her husband's from the upper right corner of the box; the wine is on the horizontal axis and books are on the vertical axis. Therefore, in an Edgeworth box for Elizabeth and her husband, any allocation is Pareto Optimal. True or False? Please submit 1 if True and O if False.
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