Suppose two people start with an initial endowment and trade until they obtain a Pareto-efficient allocation with the corresponding price line.What happens when more people who have the same tastes and endowments as the original two traders are included in the Edgeworth box analysis?

Question

Quizplus · Accepted Answer

Adding more people with the same tastes and endowments does not change the relative demand and supply of the initial two traders. Therefore, the price line remains the same.

Suppose Two People Start with an Initial Endowment and Trade