Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

6.3.1 Efficiency of distribution of commodities among the 
consumers: 
This can be explained with the help of Edgeworth Box diagram. 
Assumptions: 
a) Only two individuals namely Suresh (S) and Ramesh (R) 
constitute the entire society. 
b) The total output consist of only two commodities food (F) and
car (C)
c) There is absence of interpersonal comparison of utilities.
0
1
2
3
4
5
6
7
8
1
2
3
4
5
6
7
8
9
Food
C
ar
FIGURE 6.1 EFFICIECNY OF DISTRIBUTION OF COMMODITIES 
AMONG CONSUMERS 
In the diagram OS and OR are the origin for Suresh and 
Ramesh respectively. IS
1
to IS
5
are the indifference curves for 
Suresh. IR
1
to IR
5
are the indifference curves for Ramesh. Initially 
the two goods are distributed between Suresh and Ramesh at point 
K then Suresh gets KH of food and KL of cars. Point K falls on the 
IR
2
and IS
4
(K is the intersection point between (IR
2
and IS
4
). It can 
be seen that a movement from K to P increases the welfare of 
Suresh but does not decrease the welfare of Ramesh. (Suresh 
moves from IS
4
to IS
5
but Ramesh is on the same indifference 
H
C
M
N
O
P
T
IS
1
IS
2
IS
3
IS
4
IS
5
IR
1
IR
2
IR
3