Let there be 3 people in the economy. Let the utility function of person 1 be u=min(x,y), utility of person 2 be = max(x,y) and the utility function of the 3rd consumer be U=x+y. Let the endowment points be A(5,5), B(5,5) c(5,5). An example of a pareto efficient allocation is: A) A(5,5), B(5,5) c(5,5) B) A(5,5), B(5,0) c(10,5) C) A(5,5), B(0,5), c(5,10) D) None of the above The correct answer is D. Explain clearly. Also, please state the pareto effient outcome not mentioned in the options (if it exists).

Let there be 3 people in the economy. Let the utility function of person 1 be u=min(x,y), utility of person 2 be = max(x,y) and the utility function of the 3rd consumer be U=x+y. Let the endowment points be A(5,5), B(5,5) c(5,5). An example of a pareto efficient allocation is: A) A(5,5), B(5,5) c(5,5) B) A(5,5), B(5,0) c(10,5) C) A(5,5), B(0,5), c(5,10) D) None of the above The correct answer is D. Explain clearly. Also, please state the pareto effient outcome not mentioned in the options (if it exists).

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.5P

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