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Smith and Jones are stranded on a desert island.Each has in his possession some slices of ham(H) and cheese(C).Smith is a very choosy eater and will eat ham and cheese only in the fixed proportions of 2slices of cheese to 1 slice of ham.His utility function is given by US=min(H,C/2).Jones is more flexible in his dietary tastes and has a utility function given by UJ=4H+3C.Total endowments are 100 slices of ham and 200 slices of cheese.

(a)Draw the Edgeworth box diagram that represents the possibilities for exchange in this situation.What is the only exchange ratio that can prevail in any equilibrium?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M954495

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