Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose there are two consumers, A and B.There are two goods, X and Y.There is a TOTAL of 8 units of X and a TOTAL

Suppose there are two consumers, A and B.There are two goods, X and Y.There is a TOTAL of 8 units of X and a TOTAL of 8 units of Y.The consumers' utility functions are given by:

UA(X,Y) = 4X + Y

UB(X,Y) = X*Y

For each of the following allocations, write TRUE if it is Pareto Efficient and FALSE if it is not:

i) Consumer A gets 6 units of X and 2 units of Y, and Consumer B gets 2 units of X and 6 units of Y.

ii) Consumer A gets 4 units of X and 6 units of Y, and Consumer B gets 4 units of X and 2 units of Y.

iii) Consumer A gets 7 units of X and 0 units of Y, and Consumer B gets 1 units of X and 8 units of Y.

iv) Consumer A gets 4 units of X and 0 units of Y, and Consumer B gets 4 units of X and 8 units of Y

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of economics

Authors: N. Gregory Mankiw

6th Edition

978-0538453059, 9781435462120, 538453052, 1435462122, 978-0538453042

More Books

Students also viewed these Economics questions

Question

6. Discuss the philosophies of four quality gurus.

Answered: 1 week ago