2 products:
        Candy bars (B)
        Other sweets (S)

Consider a, the initial allocation of (BT, ST).

    1. Who values another candy bar more highly compared to other sweets?

    2. How did you decide your answer to question 1?  

    3. What direction of trade will make both Machiko and Cami better off?

    4. Suppose that a rate of exchange of 1 candy bar for 4 other sweets allows Machiko and Cami to move from allocation a to their contract curve. Sketch what the new distribution of candy bars and other sweets might look like in the figure above (label the new allocation "b").

    5. Is point b Pareto optimal? Explain why or why not.