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Chapter 1Figure It Out 15.3

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Consider the Edgeworth box below, which depicts the amount of soda and pizza available to two consumers, Thelma and Lou.

Suppose that Thelma and Lou are initially at point A. How much soda does each have? How many pizzas?

Lou has soda(s) and pizza(s).

Thelma has soda(s) and pizza(s).

Lou’s origin is at the bottom right. Point A is three pizzas to the right of Lou’s origin; it is one soda up from Lou’s origin. Therefore, Lou has one soda and three pizzas. Thelma’s origin is in the upper right corner of the Edgeworth box. Point A is three sodas down and one pizza left of Thelma’s origin, so she has three sodas and one pizza. For further review see section “Efficiency in Markets: Exchange Efficiency”.
GLS 2e FIO 15.3 Part A
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      Consider the Edgeworth box below, which depicts the amount of soda and pizza available to two consumers, Thelma and Lou.

      Suppose that Thelma and Lou’s child Ted takes 2 pizzas from Lou and gives them to Thelma, and then takes 2 sodas from Thelma and gives them to Lou. Does such a reallocation represent a Pareto improvement?

      		A.
      		B.
      GLS 2e FIO 15.3 Part B
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          Consider the Edgeworth box below, which depicts the amount of soda and pizza available to two consumers, Thelma and Lou.

          Suppose that Thelma and Lou’s child Ted takes 1 pizza from Lou and gives it to Thelma, and then takes 1 soda from Thelma and gives it to Lou. Does such a reallocation represent a Pareto improvement?

          		A.
          		B.
          GLS 2e FIO 15.3 Part C
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