Question: Jack Sprat could eat no fat, and his wife would eat no lean. Suppose that Jack is endowed with 4 pounds of fat and 8 pounds of lean, and his wife was endowed with 6 pounds of fat and 2 pounds of lean.

a. In an Edgeworth box, show the endowment point, the Pareto Optimal Allocations, and the competitive equilibrium. Is the competitive equilibrium Pareto Optimal?

b. Assume that the price of fat is $1 per pound. What is the price of lean at the competitive equilibrium?