This article presents a new pedagogical device that complements the Edgeworth-Bowley box and its representations of the fundamental theorems of welfare economics. The device is a general equilibrium model, carefully structured to eliminate unnecessary components that unduly complicate the exposition. As such, it is an elaboration of the relatively straightforward concept of maximizing the total social surplus across markets, yet the general equilibrium structure provides substance and rigor that simple consumer and producer surplus narratives do not provide.
One key ingredient of the model is a productive resource that has no direct utility value so that it is always fully employed. This provides a simple step to production efficiency. Perhaps a more important piece is a recognition that the marginal social cost curves, which are representations of the market supply curves, can be derived as the geometric reflections of the market demand curves in the alternative markets. This allows for a sharp focus on the opportunity cost of resources, which is often obscured in simple total surplus maximization and Edgeworth-Bowley box narratives.
The model presented here provides perspectives and insights into the fundamental theorems of welfare economics that are different from those provided by the Edgeworth-Bowley box and simple total social surplus analyses. It is as accessible as the Edgeworth-Bowley box, yet it does not appear to be widely recognized or used in current economic textbooks and classrooms. A goal of this paper is to encourage more widespread use of this device.