Edgeworth Box in Consumption
The Edgeworth box in consumption represents the possible combinations of goods that two individuals can consume, given their initial endowments of goods. The box is a graphical representation of the Pareto efficiency concept in economics, where it shows all possible allocations of goods that make one individual better off without making the other worse off.
- Initial Endowments: The two individuals are represented by the axes of the box, with each axis representing the quantity of a particular good. The initial endowments of each individual are shown as points on the axes.
- Contract Curve: The contract curve in the Edgeworth box represents all the points where the individuals are indifferent between different consumption bundles. Any point on the contract curve is Pareto efficient, as it represents an allocation where no individual can be made better off without making the other worse off.
- Gains from Trade: The area inside the contract curve represents the possible gains from trade between the two individuals. By moving to a point on the contract curve, both individuals can increase their utility without reducing the utility of the other.

Edgeworth Box in Production
The Edgeworth box in production represents the possible combinations of goods that can be produced by two firms, given their production technologies and inputs. It is a graphical tool used to analyze the efficiency of production allocations between two firms.
- Production Possibilities: The axes of the box represent the quantities of two different goods that can be produced by the two firms. The initial endowments of inputs and technologies determine the production possibilities of each firm.
- Production Possibility Frontier: The production possibility frontier in the Edgeworth box shows all the points where the firms are using their resources efficiently to produce goods. Any point on the frontier represents an efficient allocation of inputs and technologies between the firms.
- Efficiency: The goal is to find a point on the production possibility frontier where both firms are maximizing their production while using their resources efficiently. Any allocation inside the frontier represents underutilization of resources, while any allocation outside the frontier is unattainable with the given inputs and technologies.