we argued that if an allocation maximizes the sum of utilities, then it is efficient. Is the
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Question:
we argued that if an allocation maximizes the sum of utilities, then it is efficient. Is the converse true? That is if an allocation is efficient, does it necessarily maximize the sum of utilities? Answer this question by using the case of two individuals, 1 and 2, for whom an amount of $100 has to be allocated between them. Each person has the utility function, U = , where is the amount of money allocated to that person. Please also explain what efficiency means.
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