New SIDBI Grade A New Batch Starts on Nov 18

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    Question

    Umar has the utility function U(b,w) = min (b,w) and Akshat has the utility function U(b,w) = bw. If we draw an Edgeworth box with b on the horizontal axis and w on the vertical axis and if we measure Umar’s consumptions from the lower left corner of the box, then the contract curve contains

    A A straight line running from the upper right corner of the box to the lower left. Correct Answer Incorrect Answer
    B A curve that gets steeper as you move from left to right Correct Answer Incorrect Answer
    C A straight line with slope ¼ passing through the upper right corner of the box Correct Answer Incorrect Answer
    D A curve that gets flatter as you move from left to right Correct Answer Incorrect Answer

    Solution

    Can be verified after drawing IC for both

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