Mutt and Je are going to trade corned beef and cabbage. Mutt has 4 pounds of cabbage and no beef, and Je has 4 pounds of beef and no cabbage. Mutt is indifferent between corned beef and cabbage. Je always consumes corned beef and cabbage in fixed proportions of 1:1.
(a) Illustrate the endowment in an Edgeworth box. Draw some of their indifference curves. Shiw the locus of Pareto efficient allocations
(b) If Mutt and Je were to trade using a competitive market, what would be the equilib- rium ratio of the price of corned beef and the price of cabbage? What would be the equilibrium consumption bundle for Je ?