Jack Sparrow and his wife consume wine (W) and books (B). Jack Sparrow's utility function is Ujack(W, B)= B. His wife's utility function is Uwife(W, B) - W. Jack's endowment is 26 bottles of wine and 12 books and Jack's wife's endowment is 11 bottles of wine and 17 books. In the Edgeworth box, Jack's consumption is measured from the lower left corner, and his wife'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 Jack and his wife, there is only one Pareto Optimal allocation that is located in the top left corner of the box. True or False?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
E1
Question 8
Jack Sparrow and his wife consume wine (W) and books (B).
Jack Sparrow's utility function is Ujack(W, B)= B. His wife's utility function is Uwife(W, B) - W. Jack's
endowment is 26 bottles of wine and 12 books and Jack's wife's endowment is 11 bottles of wine
and 17 books.
In the Edgeworth box, Jack's consumption is measured from the lower left corner, and his wife'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 Jack and his wife, there is only one Pareto Optimal allocation
that is located in the top left corner of the box. True or False?
Please submit 1 if True and 0 if False.
Transcribed Image Text:Question 8 Jack Sparrow and his wife consume wine (W) and books (B). Jack Sparrow's utility function is Ujack(W, B)= B. His wife's utility function is Uwife(W, B) - W. Jack's endowment is 26 bottles of wine and 12 books and Jack's wife's endowment is 11 bottles of wine and 17 books. In the Edgeworth box, Jack's consumption is measured from the lower left corner, and his wife'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 Jack and his wife, there is only one Pareto Optimal allocation that is located in the top left corner of the box. True or False? Please submit 1 if True and 0 if False.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 3 images

Blurred answer
Knowledge Booster
Comparative Advantage
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education