Analyzing Trade And Pareto Efficiency: A Study Of Indifference Curves And Endowment Points

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Analyzing Trade and Pareto Efficiency: A Study of IndifferenceCurves and Endowment PointsConsider the endowment point in a two-good economy where Sally has 4pieces of meat and Harry has 30 pieces of fruit. Based on their indifferencecurves, analyze how trade between Sally and Harry can make both of thembetter off. Discuss the resulting allocation after the trade and whether thetrade results in a Pareto efficient outcome. In your response, explain howthe shaded region on the indifference curve diagram reflects improvementsfor both parties and why the new allocation does not achieve Paretoefficiency.Word Count Requirement:400-500 words.1)The endowment point is located in the bottom right corner of the box.This corresponds to Sally still having her four pieces of meat and Harry stillhaving his 30 pieces of fruit.2)Harry and Sally would be made better off by trade, based on theirindifference curves. Each point in the shaded region moves Sally’s position

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