Exam 11: General Equilibrium and Welfare

Consider three ways of allocating two goods in a two-person exchange economy. I.Both individuals take prices as given and equilibrium prices are established by an impartial auctioneer. II.One individual can act as a perfect price discriminator and force the other individual to pay a different price for each unit of a good that is traded. III.One individual is a monopolist and can charge the other individual a single,utility-maximizing price. Which of these situations is efficient?

The "Classical Dichotomy" refers to:

In a two-good world,every allocation would be efficient only if:

An efficient allocation of productive inputs requires that: