Consider an economy with 3 agents, Mohammed (M), David (D) and Susan (S). There are two goods available, good x, and good y. The marginal rates of substitution (where good x is on the horizontal axis and good y is on the vertical axis) are given by 〖MRS〗_xy^M = 〖2y〗_M/x_M for Mohammed, 〖MRS〗_xy^D = 〖2y〗_D/x_D for David and 〖MRS〗_xy^S = y_S/x_S for Mohammed and David are both consuming twice as much of the good x than good y, while Susan is consuming equal amounts of x and y. What are the conditions for Pareto efficiency in an exchange economy?

Consider an economy with 3 agents, Mohammed (M), David (D) and Susan (S). There are two goods available, good x, and good y. The marginal rates of substitution (where good x is on the horizontal axis and good y is on the vertical axis) are given by 〖MRS〗_xy^M = 〖2y〗_M/x_M for Mohammed, 〖MRS〗_xy^D = 〖2y〗_D/x_D for David and 〖MRS〗_xy^S = y_S/x_S for Mohammed and David are both consuming twice as much of the good x than good y, while Susan is consuming equal amounts of x and y. What are the conditions for Pareto efficiency in an exchange economy?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter1: Introducing The Economic Way Of Thinking

Section: Chapter Questions

Problem 7SQ

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