Efficient Allocation

[NM]

Q) Consider an exchange economy with two agents and aggregate endowments as (10,10).. The agent's utility functions are u1=x1+2y1 and u2=2x2+y2. Examples of efficient allocations are:

a. (x1,y1) = (5,10); (x2,y2) = (5,0)
b. (x1,y1) = (0,10); (x2,y2) = (10,0)
c. (x1,y1) = (0,5); (x2,y2) = (10,5)
d. All of the above

[Granpa Simpson]

option d is the correct answer..!!!!

[Dreyfus]

The contract curve is the entire y axis of 1 and x axis of 2 ie the left edge and top edge of the Edgeworth box when 1's origin is at lower left  and 2's at upper right......by this ull get all the allocations are efficient

[Granpa Simpson]

This is because in all the allocations for A y1>x1 and for B x2>y2, thus in none of the cases a transfer can be made which makes atleast one better without making the other worse off..!!!

[Granpa Simpson]

Yes i think Vaibhav is correct..!!!!

[NM]

Hey guys, thank you so much.

Can you please explain the attached questions? I seem to be interpreting them in a wrong way.

Thanks. :)