How to read this
Each point of the box divides the total endowment between Alf (a, from the bottom left) and Bill (b, from the top right). Both start at and face the price line through it. Where their offer curves cross, both markets clear.
- Move the price: at most prices their wishes (the two dots) do not match, and one good is in excess demand.
- Every equilibrium lies on the contract curve inside the lens: in the core. Try Three equilibria.
- Second welfare theorem: any efficient allocation can be reached with a lump-sum transfer. Drag to change the endowments.