Question

Umar has the utility function U(b,w) = min

Q: Answer-Umar has the utility function U(b,w) = min (b,w) and Akshat has the utility function U(b,w) = bw. If...

Can be verified after drawing IC for both

(b,w) and Akshat has the utility function U(b,w) = bw. If we draw an Edgeworth box with b on the horizontal axis and w on the vertical axis and if we measure Umar’s consumptions from the lower left corner of the box, then the contract curve contains

A A straight line running from the upper right corner of the box to the lower left.

B A curve that gets steeper as you move from left to right

C A straight line with slope ¼ passing through the upper right corner of the boxvvvvvvvvvvvvvv

D A curve that gets flatter as you move from left to right

E None

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Umar has the utility function U(b,w) = min

Solution