# What does the MRS for Bob equal at the endowment point?

and coffees Show more Consider an endowment economy with two consumers Andy and Bob and two goods movies (m) and coffees (c). Andy has the preferences: Ua((MaCa)=2Ln(Ma)+Ln(Ca) while Bob has preferences Ub(Mb Cb)= 2Ln(Mb)+3Ln(Cb). Andy is endowed with 25 movies and 75 coffees; Bob is endowed with 75 movies and 25 coffees. a) Depict the endowment point in an Edgeworth box diagram with movies on the horizontal axis. Put the origin for Andy at the southwest corner and the origin for Bob at the northeast corner. What does the MRS for Andy equal at the endowment point? What does the MRS for Bob equal at the endowment point? b) Consider the following consumption bundles: Andy consumes 50 movies and 25 coffees; Bob consumes 50 movies and 75 coffees. Are these consumption bundles on the contract curve? Support your answer explicitly. c) Do the consumption bundles in part (b) correspond to competitive exchange under a Walrasian auctioneer? Support your answer explicitly. Show less

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