Answer to Question #71453 in Microeconomics for Abel

Question

explain the main reasons why a competitive equilibrium may fail to exist. Illustrate using an Edgeworth box

Answer 1

The curves of indifference (got from the function of utility of every consumer) can be done in a box both for Abby and for Octavio. Points on the crooked indifference of everybody present identically-liked combinations of size of two commodities for this man. Thus, Abby is indifferent between one combination of commodities and the other on any of her curves of indifference, and the same touches of Octavio. For example, Abby can estimate 1 liter of water and 13 hamburgers, the same as 5 liters of water and 4 hamburgers, or 3 liters and 10 hamburgers. There is an enormous amount of such curves that can be made among combinations of commodities for every consumer (Octavio or Abby). With the origin of Octavio (by a point that represents the zero of every benefit) in the lower left-hand corner of the windows of Edjvort and the origin of Abby in the upper right to the corner, usually the curves of the indifference of Octavio will protuberant to its origin , and Abby will be protuberant to her origin. If the curve of indifference for Abby crosses one of the curves of indifference for Octavio in more than one