Jack Spratt's utility function is U(F, L)= L.His wife's utility function is U(F, L)= F.If Jack's initial endowment is 100 units of F and 50 units of L and if Jack's wife's initial endowment is 60 units of F and 100 units of L, then in an Edgeworth box for Jack and his wife, an allocation of F and L will be Pareto optimal only if it is at a corner of the box.

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Quizplus · Accepted Answer

Pareto optimality in an Edgeworth box does not require allocations to be at the corners of the box. Pareto optimal allocations occur along the contract curve, which represents allocations where the marginal rate of substitution between goods F and L is equal for both Jack and his wife, indicating no further mutually beneficial trades can be made. This curve does not necessarily lie at the corners of the box.

Jack Spratt's Utility Function Is U(F, L)= L