ECON 304 Lecture Notes - Lecture 3: Edgeworth Box

• School: University of Waterloo
• Department: Economics
• Course: ECON 304
• Professor: Matt Doyle

Document Summary

Are there any trading frictions in standard microeconomic models (like the edgeworth box)? ix) explain why there is no role for money in the edgeworth box model. What does this tell us about the role of money in actual economies: explain why there is no role for financial institutions (like banks) in the edgeworth box model. What does this tell us about the role of these institutions in actual economies? xi) consider the following simple trading friction: it costs consumer 1 x units of good. 2 to trade (you could think of this as the gas required to get to market).