Refer to Figure 15-2. To maximize profit, the firm will produce at output level

Refer to Scenario 16.3. Is the current distribution Pareto optimal?

A) Yes. B) No, as Sam has more of both goods. C) No, as it is possible to find a way for Sam to sell tee shirts to Sally (and receive candy in return) that would make both of them better off. D) No, as it is possible to find a way for Sam to sell candy to Sally (and receive tee shirts in return) that would make both of them better off. E) Without knowing the prices of tee shirts and candy we cannot determine if this distribution is Pareto optimal.

Is it possible for the economy to be at full employment and still have some people who are unemployed?

A) No, full employment means that no one is unemployed. B) Yes, since full employment exists if the economy is operating at the natural unemployment rate and there is always some natural unemployment. C) Yes, since full employment exists if the economy is operating at the frictional unemployment rate and there is always some frictional unemployment. D) Yes, since full employment equals the sum of the cyclical unemployment rate and the natural unemployment rate, and there is always some cyclical unemployment. E) none of the above