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Hello, I need some help understanding these questions. Thank you Absence of Envy and Efficiency Suppose there are two persons, 1 and 2, and two
Hello, I need some help understanding these questions. Thank you
Absence of Envy and Efficiency Suppose there are two persons, 1 and 2, and two goods, Xand Y, where x, + = X and + = Y . The utility functions of 1 and 2 are, respectively: 0.5 Consider the Pareto efficiency and/or fairness (in the sense of envy-freeness) of some possible distributions of these goods. Allocation I: 10, = 16,x2 = 10, Y2 = 4 l. What is the value of person I 's marginal rate of substitution of X for Y, MRS' with this allocation? 2. What is the value of MRS2 with this allocation? 3. State the equality or inequality that proves whether I is Pareto efficient or inefficient. 4. Is I Pareto efficient (PE) or Pareto inefficient (PI)?
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