15. There is a shortage of bottled water in California, and the governor decides that the government distributes equal quantities of bottled water to each person and at no cost to the consumers. Consumers are not allowed trade or give their water to other people. Is this distribution of water Pareto efficient? a. Yes, because each person has the same amount of water. b. Yes, because everyone receives water for free c. Not if people have different marginal rates of substitution between water and other goods. d. It is impossible to determine without knowing the price of water and income of goods.

15. There is a shortage of bottled water in California, and the governor decides that the government distributes equal quantities of bottled water to each person and at no cost to the consumers. Consumers are not allowed trade or give their water to other people. Is this distribution of water Pareto efficient? a. Yes, because each person has the same amount of water. b. Yes, because everyone receives water for free c. Not if people have different marginal rates of substitution between water and other goods. d. It is impossible to determine without knowing the price of water and income of goods.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 3PA

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