Answer to Question #268349 in Microeconomics for Chilu

Question

Suppose you have an economy of two individuals’ ad two goods.When is the allocation of goods said to be Pareto Optimal?Thoroughly illustrate and explain the concept of optimality using an Edgeworth box.Economists often argue that a trade-off exists between efficiency and equity, with reference to the Edgeworth box used in 2 support these claims.For resource allocation to be deemed efficient within an economy, three conditions must be meet. State and explain these three conditions.

Answer 1

Edgeworth box tends to be graphical representation of exchange issues impacting individuals and similarly allows an effective solution to the exchange issue.