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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 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. ...

    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.