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In a two - good, two - consumer economy, the current allocation is such that Alice has Marginal Utilities for goods x and y ,
In a twogood, twoconsumer economy, the current allocation is such that
Alice has Marginal Utilities for goods x and y respectively, MU A
x and
MU A
y Ben has Marginal Utilities MUB
x and MUB
y Both
consumers have standard preferences. Choose the correct statement.
a The allocation is Pareto efficient.
b A Pareto improvement upon the original allocation is possible, and
it requires transferring both goods from Ben to Alice.
c A Pareto improvement upon the original allocation is possible, and
it requires transferring some x from Alice to Ben, while transferring
some y in the opposite direction.
d A Pareto improvement upon the original allocation is possible, and
it requires transferring some x from Ben to Alice, while transferring
some y in the opposite direction.
e None of the above.
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