A winter storm cuts the power supply and isolates a small town in the mountains. The people

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A winter storm cuts the power supply and isolates a small town in the mountains.

The people rush to buy candles from the town store, which is the only source of candles. The store owner decides to ration the candles to one per family but to keep the price of a candle unchanged.

1. Who gets to use the candles? Who receives the consumer surplus and who receives the producer surplus on candles?

2. Is the allocation efficient? Is the allocation fair?

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Foundations Of Economics

ISBN: 9780134486819

8th Edition

Authors: Robin Bade, Michael Parkin

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