(Solved): 1. There are two goods in the world, tiramisu (x) and espresso (y). Michael and Angelo both conside ...

1. There are two goods in the world, tiramisu $(x)$ and espresso $(y)$. Michael and Angelo both consider tiramisu and espresso to be complements; each will consume a slice of tiramisu only if it is accompanied with a cup of espresso, and vice versa. Michael has five slices of tiramisu and a cup of espresso. Angelo has a slice of tiramisu and five cups of espresso. (a) Draw an Edgeworth box for this exchange economy. Label it carefully. Mark the original endowment point $W$. (b) Draw Michael's and Angelo's indifference curves passing through the endowment point. (c) Can you suggest a Pareto improvement over the original endowment? Mark the new allocation $W^{?}$. How many slices of tiramisu and cups of espresso will each of them consume at the new allocation?