Plotting Initial Endowment on the Edgeworth Box Graph
Question: How do you plot the following initial endowment on a Edgeworth box graph? Do the utility functions come into play in any way?
XA = (0, 4), XB = (4, 2), UA = 2X1 + X2, UB = X1+2X2© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/economics/economic-analysis-of-law/plotting-initial-endowment-on-the-edgeworth-box-graph-238
...like line A) Now refer to Figure 2. In the same way, from UB = X1 + 2X2, B's indifference curves are parallel lines with a slope of 2. (like line B)
When line A and B pass through the Pareto efficient point C the initial endowment, we know that the trade process can go down along these two lines. ...