Answer to Question #201842 in Microeconomics for Fiqah

Question

Kembang has 6 bags of sweet potato and 18 bagels. Tam Tam, on the other

hand, has 16 bags of sweet potato and 8 bagels. Kembang’s marginal rate of

substitution (MRS) of potatoes for bagels is 6 and Tam Tam’s MRS is equal

to 4. Draw an Edgeworth box diagram to show whether this allocation of

resources is efficient. Justify your answer with an economic suggestion.

Please give full explaination especially regarding the efficiency of the resources. thank you!

Answer 1

Answer:

Explanation (Justification):

The edge-worth has dimensions equal to the total economy resources. Therefore nothing is wasted as there are no left over resources available at any spot in the box.