Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade.The men are given food when they walk in and the women are given drink.Suppose they have identical preferences where food and drink provide utility U = FαDβ.The contract curve in the Edgeworth box using a representative man and woman would be

Question

Quizplus · Accepted Answer

Since the utility function for both men and women is identical, the contract curve between them will be a curve connecting the lower left corner (where the woman gets only D) and the upper right corner (where the man gets only F). It does not have to be a straight line, so the correct answer is option B.

Suppose the Economics Department Has a Graduation Party for Its