With partial support from a grant from UCLA's Instructional Enhancement Initiative, I have enlisted UCLA Economics graduate student Geoff Gerdes to develop the Java code to help illustrate an important model in consumer theory. The Edgeworth Box model shows how there can be "gains from exchange" between two consumers in a simplified economy where there are just two goods available (x and y) in limited quantity.
The preliminary view you see on this screen provides pop-up windows that give you an idea about what to expect when you activate the Edgeworth Box Applet itself. Move the cursor around the features that you see below to receive a short explanation of what each component represents. When you are comfortable that you know how the applet works, you may go ahead and try it.
Note that in the actual Edgeworth Box applet, placing the mouse pointer in any part of the plot window and clicking will move the allocation to that point. The point can also be "dragged" around the plot window and the relevant indifference curves for each consumer will be continuously revised to reflect each individual's current allocation. These allocations, and each consumer's resulting individual utility, will be continuously revised in the upper and lower margins of the plot.
The preference functions of two individuals are depicted in an Edgeworth box. In order to depict these preferences via a set of indifference curves, we must work from a mathematical utility function for each individual. The level of utility of each individual is of the form U = xayb. You can change the configuration of preferences for each individual by changing the values of a and b that characterize their utility function and its associated indifference curves. You can also change the initial endowments of x and y allocated to each of the two individuals.
REMEMBER: This image provides only descriptions. If you click anywhere on this image, nothing will happen. Move to the real applet for action.
OK, I'm ready to go. Let's try the Edgeworth Box Applet
I'm so good at Edgeworth Box stuff that I'm ready for a quiz.