Chapter 16: First and Second Welfare Theorems in General Equilibrium

Static Graphics

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Deriving a Graphical Depiction of a 2-Person, 2-Good Exchange Economy

Exhausting Gains from Trade in the Edgeworth Box

The Contract Curve: Pareto Efficient Allocations in the Edgeworth Box

The Core: Predicting the Outcome from Negotiated Trades in the Edgeworth Box

A Disequilibrium Price: Supply is not equal to Demand

Competitive Equilibrium Prices: Supply equals Demand

The Second Welfare Theorem

Robinson Crusoe Choosing His Optimal Bundle

Robinson Crusoe as Price-Taking Producer and Consumer

Disequilibrium and Equilibrium in the Robinson Crusoe Economy

Appendix

End Points of Core no Longer in the Core as the Economy Expands

A Shrinking Core as the Economy Expands