In the Edgeworth diagram model, a doubling of the prices will
A)double the dollar value of each consumer's initial endowment.
B)double the quantities of each consumer's initial endowment.
C)cut in half the dollar value of each consumer's initial endowment.
D)decrease the dollar value of each consumers' initial endowment.

Question

Quizplus · Accepted Answer

Doubling the prices in the Edgeworth diagram model will double the dollar value of each consumer's initial endowment because the value of the endowment is calculated based on the prices of the goods it contains. If the prices double, so does the dollar value of the endowment, assuming the quantities of goods in the endowment remain constant.

In the Edgeworth Diagram Model, a Doubling of the Prices