Timeline for How do we find pareto optimal points in a 2 goods simple exhange economy?
Current License: CC BY-SA 3.0
7 events
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Apr 14, 2017 at 7:52 | comment | added | Amit | At the corner, condition for Pareto optimality is MRS $ = a\geq 5$. Refer to my answer for the picture proof: economics.stackexchange.com/a/16270/11824 | |
Apr 14, 2017 at 7:51 | comment | added | Giskard | So am I. Consider the extreme example of $U_A(x_1,x_2) = 2x_1 + x_2$ and $U_B(x_1,x_2) = x_1 + 2x_2$. The allocation where $A$ gets (1,0) and $B$ get (0,1) is clearly PO but $MRS_A = 2 \neq 1/2 = MRS_B$. The same will be true in some cases in this question. | |
Apr 13, 2017 at 22:26 | comment | added | Bensstats | @denesp the question cited is talking about envy free allocation and I'm giving the answer for Pareto optimal | |
Apr 13, 2017 at 21:46 | comment | added | Giskard | $$MRS_1=MRS_2$$ is only required in interior points. The allocation given in the question is not an interior point. | |
Apr 13, 2017 at 20:11 | history | undeleted | Bensstats | ||
Apr 13, 2017 at 19:48 | history | deleted | Bensstats | via Vote | |
Apr 13, 2017 at 19:47 | history | answered | Bensstats | CC BY-SA 3.0 |