Question: Joe College owns 150 pairs of jams and 10 pairs of shoes. Imelda Marcos owns 1 pair of jams (a gift from Ronald Reagan) and 300 pairs of shoes.

1. Draw an Edgeworth box and show where the endowment point is. Be sure to indicate how you knew what size to make the box and where to place the endowment. Now draw in some reasonable strictly convex preferences for each agent, and point out the competitive equilibrium.
2. What does the first welfare theorem tell us about the competitive equilibrium? Given this, would Imelda ever want to move to a different consumption point than the competitive equilibrium you pointed out in part a?

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