An Edgeworth box is shown for individuals M and N. In total, there are 100 units of good 'X and 80 units of good 'Y' available. The endowment point 'A' represents the initial allocation of these two goods to individuals M and N. A price line is shown passing through points 'A', 'B', and 'C that represents a given relative price. This price ratio does not represent a competitive equilibrium.
An Edgeworth box is shown for individuals M and N. In total, there are 100 units of good 'X and 80 units of good 'Y' available. The endowment point 'A' represents the initial allocation of these two goods to individuals M and N. A price line is shown passing through points 'A', 'B', and 'C that represents a given relative price. This price ratio does not represent a competitive equilibrium.
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter20: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 3CQ: Recent research confirms that the demand for cigarettes is not only inelastic, but it also indicates...
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Transcribed Image Text:An Edgeworth box is shown for individuals M and N.
In total, there are 100 units of good X and 80 units of good 'Y' available. The
endowment point 'A' represents the initial allocation of these two goods to
individuals M and N. A price line is shown passing through points 'A', 'B', and 'C
that represents a given relative price.
This price ratio does not represent a competitive equilibrium.
To achieve a competitive equilibrium, the price of good X will
price of good Y must
Individual M's level of satisfaction will
this price change.
and/or the
relative to point C with
GoodY
68
50
38
Ом
15
B
42
Good X
60
ON
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