CYU: The Edgeworth Box Framework


Consider the following Edgeworth box economy. There are two consumers, Aria and Brixton, and two goods, 1 and 2. The blue indifference curve passing through the endowment point shows Aria’s preferences; the orange indifference curve shows Brixton’s.


  1. Suppose Aria (origin bottom-left) has $x_1^A = 4$ units of good 1 and $x_2^A = 8$ units of good 2. Drag the point labeled “Endowment” to this allocation. How much of each good does Brixton have?
  2. Aria proposes a trade which is a Pareto improvement relative to the endowment. Drag the point labeled “After Trade” to an allocation that she might have proposed. What are the “terms of trade” (i.e., how much of one good for how much of the other?)