Suppose Humphrey starts out with four pounds of food and seven gallons of water, while Lauren starts out with eight pounds of food and five gallons of water. Draw an Edgeworth box that shows all possible allocations of these goods, and plot the endowment points. Now suppose that both Lauren and Humphrey’s preferences correspond to the utility function U(F, W) = min{F, W} (where F refers to pounds of food and W refers to gallons of water). This is a case of perfect complements. Add Humphrey and Lauren’s indifference curves to the Edgeworth box. Then draw the contract curve. To which points on the contract curve is each consumer willing to trade?

Which term refers to the cost that motivates an economic decision

Select the word from the list that best fits the definition sometimes

You are thinking of making your mansion more energy efficient by replacing some of the light bulbs with compact fluorescent bulbs, and insulating part or all of your exterior walls. each compact fluorescent light bulb costs $4 and saves you an average of $2 per year in energy costs, and each square foot of wall insulation costs $1 and saves you an average of $0.20 per year in energy costs.† your mansion has 150 light fittings and 3000 sq ft of uninsulated exterior wall. to impress your friends, you would like to spend as much as possible, but save no more than $750 per year in energy costs (you are proud of your large utility bills). how many compact fluorescent light bulbs and how many square feet of insulation should you purchase? how much will you save in energy costs per year? (if an answer does not exist, enter dne.)