What is the equation of the contract curve

Reference no: EM132200718

Question: The following questions concern practical cases in an Edgeworth box.

a) What is the equation of the contract curve? What does it represent?

b) Can the two agents' indifference curves be the same line as the contract curve? What would it imply?

c) Can the two agents' indifference curves be perpendicular to the contract curve at a certain point? What would it imply? (Hint: equilibrium price ratio)

d) How would you compute the Marshallian demands and and the equilibrium price ratio? (Give the formulas and reasoning)

Reference no: EM132200718

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