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→Indifference Curve: better
But Chris likes potato chips more than corn; Stephanie prefers the opposite. To decide how to allocate the food, you ask Chris and Stephanie to draw their indifference curves with potato chips on the y-axis and corn on the x-axis. You learn from the curve that Chris is just as happy with 9 potato chips and 2 kernels of corn as receiving 6 potato chips and 10 kernels of corn. Chris’s utility is same in both cases. Meanwhile, Stephanie is just as happy receiving 18 kernels of corn and 1 chip. Fine, you give Chris 9 chips and 2 kernels and Stephanie 18 kernels and 1 chip.
But Chris likes potato chips more than corn; Stephanie prefers the opposite. To decide how to allocate the food, you ask Chris and Stephanie to draw their indifference curves with potato chips on the y-axis and corn on the x-axis. You learn from the curve that Chris is just as happy with 9 potato chips and 2 kernels of corn as receiving 6 potato chips and 10 kernels of corn. Chris’s utility is same in both cases. Meanwhile, Stephanie is just as happy receiving 18 kernels of corn and 1 chip. Fine, you give Chris 9 chips and 2 kernels and Stephanie 18 kernels and 1 chip.
Was this worth it? You bet: now you have two extra potato chips that you would not have had by splitting everything equally. Chris and Stephanie are just as happy, and you can share the additional chips with Kevin.
Was this worth it? Yes: now you have two extra potato chips that you would not have had by splitting everything equally. Chris and Stephanie are just as happy, and you can share the additional chips with Kevin.
==Consumer Surplus==
==Consumer Surplus==