Can it be efficient for one trader to consume all units of the goods while the other trader consumes nothing? In other words, does this point lie on the contract curve?
What will be an ideal response?
Yes, it is a Pareto Optimal point (though perhaps socially undesirable for obvious reasons). In order to improve the utility of one consumer, we must reduce the consumption of the other, thereby making that other consumer worse off.
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In the figure above, which of the following is true?
i. Governments coordinate economic activities of households and firms. ii. Governments buy goods and services in goods markets. iii. Households pay taxes directly to firms. A) i and ii B) only i C) only iii D) ii and iii E) only ii
Which of the following is an aggregate?
A. the number of shoes in one man's closet B. the bushels of apples one farmer sells C. the total production of all goods and services D. the price of a particular textbook