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Question 1 (12 points). For each of the following, indicate whether or not the allocation is efficient. If not, come up with a Pareto preferred
Question 1 (12 points). For each of the following, indicate whether or not the allocation is efficient. If not, come up with a Pareto preferred allocation. a. There exists 15 frisbees and 10 pairs of cleats. Dave is allocated 15 frisbees and 10 pairs of cleats, with Luke getting nothing. b. There exists 15 frisbees and 10 pairs of cleats. Dave and Luke are each allocated 7 frisbees and 5 pairs of cleats. c. Dave has 10 frisbees and 4 pairs of cleats and Luke has 5 frisbees and 6 pairs of cleats. At this point, Dave's marginal rate of substitution of frisbees () for cleats (c) is MRSP = -2 (Dave is indifferent between 1 more frisbee and two pairs of cleats). Luke's marginal rate of substitution is MRSL = -1. fc
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