Pure exchange economy Assume that Adam and eve each have conventionally shaped indifference curves Adam's happiness increases as he consumes more therefore his utility is higher for bundles toward the northeast in the edgeworth box We can therefore draw standard" indifference curves for Adam in this picture. Adam would get even higher utility by moving further to the northeast, outside of the edgeworth Box but he is constrained by the resources on the island 66 Pure exchange economy • Assume that Adam and Eve each have conventionally shaped indifference curves. • Adam’s happiness increases as he consumes more; therefore his utility is higher for bundles toward the northeast in the Edgeworth Box. – We can therefore draw “standard” indifference curves for Adam in this picture. Adam would get even higher utility by moving further to the northeast, outside of the Edgeworth Box, but he is constrained by the resources on the island