The Edgeworth Box

The Edgeworth Box is a tool in economics that visualizes how two people can share and trade two types of goods to reach an optimal distribution. Imagine a rectangle representing both individuals' combined resources. Each person’s allocation is shown inside, and their preferences determine how they might move toward mutually beneficial agreements. The box helps illustrate concepts like efficiency and fairness in exchanges, showing all possible ways resources can be shared so that no one can be better off without making someone else worse off. It’s a way to analyze and understand potential trades between two parties.