It is not optimal to have equal incomes.

Which of the following is a Pareto improvement?

A) A monopolist loses its monopoly when a government policy allows another firm to enter the market, resulting in lower prices and higher quantity available for consumers. B) A government policy is implemented that results in the middle class being better off, and the very rich only have to pay a little bit more in taxes. C) A government policy removes a market failure. D) None of the above.

Tom is a castaway who washes up on a remote island. He can kill eight birds per hour or catch ten fish per day. The natives on the island can kill ten birds per day or catch twenty fish per day. According to comparative advantage, a. Tom should kill more birds and fish less, then trade birds for fish. b. Tom should kill fewer birds and fish more, then trade fish for birds. c. Both, Tom should

kill more birds and fish less. d. Both, Tom should kill fewer birds and fish more.