Suppose there is a water shortage, and the governor proposes that the government distribute equal quantities of water to each person at no cost to the consumers
If consumers were forbidden to trade water, would such a distribution be Pareto optimal? A) Yes, because each person has the same amount of water as everyone else.
B) Yes, because everyone would be receive their water for free.
C) Not necessarily, as people may differ in their marginal rates of substitution between water and other goods.
D) It is impossible to determine without knowing the price of water.
E) none of the above
C
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a. decrease in the demand for legal services b. decrease in the quantity demanded of legal services c. increase in the demand for legal services d. increase in the quantity demanded of legal services e. new demand curve because everything else is no longer constant
The classical approach to a downturn in the business cycle was for the government to do nothing
a. True b. False Indicate whether the statement is true or false