Right... I've hit a huge wall with my coursework and I'm wondering if anyone who studies economies can help me...
The question is this:
"Draw an Edgeworth box diagram to illustrate the following situation. There are two commodities, Food and Healthcare. Abi and Ben both have indifference maps in which their preferences are convex. At current prices, there is an excess of demand for Food and a deficit of demand for Healthcare. Explain your answer."
Assuming the graph is this shape:
http://www.policonomics.com/wp-cont...um-Consumption-optimisation-Edgeworth-box.jpg
Which axis does Food and Healthcare go on? I can't quite work out if it's based on demand, supply, utility, welfare etc. The rest of the question is straight forward with the indifference maps and even then describing the graph, my brain just refuses to work out the simple case of which axis relates to what... :'(
The question is this:
"Draw an Edgeworth box diagram to illustrate the following situation. There are two commodities, Food and Healthcare. Abi and Ben both have indifference maps in which their preferences are convex. At current prices, there is an excess of demand for Food and a deficit of demand for Healthcare. Explain your answer."
Assuming the graph is this shape:
http://www.policonomics.com/wp-cont...um-Consumption-optimisation-Edgeworth-box.jpg
Which axis does Food and Healthcare go on? I can't quite work out if it's based on demand, supply, utility, welfare etc. The rest of the question is straight forward with the indifference maps and even then describing the graph, my brain just refuses to work out the simple case of which axis relates to what... :'(
