Solved

Two Individuals, a and B, Consume Two Goods xx And yy Consumer a Initially Has 3 Units Of x

Question 35

Multiple Choice

Two individuals, A and B, consume two goods, xx and yy . Consumer A initially has 3 units of xx and 2 units of yy . Consumer B initially has 5 units of xx and 6 units of yy . Also, for Consumer A the MRSx,yA=5x/3yM R S _ { x , y } ^ { A } = { 5 x } / 3 y and for Consumer B the MMRSx,yB=3x/yM M R S _ { x , y } ^ { B } = 3 x / y . Does this initial allocation of xx and yy represent an efficient allocation?


A) Yes
B) No, because both consumers could be made better off by giving A more xx and less
yy .
C) No, because both consumers could be made better off by giving A more yy and less
xx .
D) Cannot be determined from the given information.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions