Smith and Jones are stranded on a desert island. Each has in her possession some slices of ham (H) and cheese (C). Smith prefers to consume ham and cheese in the fixed proportion of 2 slices of cheese to each slice of ham. Her utility function is given by Us​=min(10H,5C). Jones, on the other hand, regards ham and cheese as substitutes - she is always willing to trade 3 slices of ham for 4 slices of cheese, and her utility function is given by U3​=4H+3C. Total endowments are 100 slices of ham and 200 slices of cheese.
Draw the Edgeworth Box diagram for all possible exchanges in this situation. What is the contract curve for this exchange economy?

Q&A Education