Suppose that every consumer is on his/her budget constraint where MRS = 0.1, the price of good X is $2, the price of good Y is $1 and firms are operating on the PPF where MRT = 4. Assume the PPF is concave. To increase efficiency, consumers should consume [more, less , the same amount] of good X; [ore, less, the same amount] of good Y. To increase efficiency, firms should produce ["", "", ""] of good X; ["", "", ""] of good Y.
Suppose that every consumer is on his/her budget constraint where MRS = 0.1, the price of good X is $2, the price of good Y is $1 and firms are operating on the PPF where MRT = 4. Assume the PPF is concave. To increase efficiency, consumers should consume [more, less , the same amount] of good X; [ore, less, the same amount] of good Y. To increase efficiency, firms should produce ["", "", ""] of good X; ["", "", ""] of good Y.
Chapter13: General Equilibrium And Welfare
Section: Chapter Questions
Problem 13.1P
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Suppose that every consumer is on his/her budget constraint where MRS = 0.1, the
- To increase efficiency, consumers should consume [more, less , the same amount] of good X; [ore, less, the same amount] of good Y.
- To increase efficiency, firms should produce ["", "", ""] of good X; ["", "", ""] of good Y.
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