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Plotting Initial Endowment on the Edgeworth Box Graph

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Question: How do you plot the following initial endowment on a Edgeworth box graph? Do the utility functions come into play in any way?

XA = (0, 4), XB = (4, 2), UA = 2X1 + X2, UB = X1+2X2

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Solution Summary

This solution explains the concept of the Edgeworth box graph in a detailed manner and also draws out a couple of example graphs in an attached Word document. The explanation provided in the response is concise and clear, yet easy to understand. This is a complex topic to understand, but the response provides enough insight on this topic so that this concept can be easily understood.

Solution Preview

Please view the attached file for example graphs, which are being referenced in the following response.

Obviously, e1A+e1B = 4, e2A+e2B = 6. It's easy to draw out an Edgeworth Box like in Figure. 1. From UA = 2X1 + X2, we can say that A's indifference curves are parallel lines with a slope of 1/2. ...

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