Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade. Students in group A are given food (F) when they walk in, and students in group B are given a drink (D). Refer to Scenario 1. Suppose that all members of both groups have identical preferences where food and drink provide utility U = FαDβ. The exchange would be such that (a) both would be guaranteed to be better off than when they entered. (b) both would be guaranteed to be at least as well off as when they entered. (c) students in group A would end up with more utility. (d) students in group B would end up with more utility.

Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade. Students in group A are given food (F) when they walk in, and students in group B are given a drink (D). Refer to Scenario 1. Suppose that all members of both groups have identical preferences where food and drink provide utility U = FαDβ. The exchange would be such that (a) both would be guaranteed to be better off than when they entered. (b) both would be guaranteed to be at least as well off as when they entered. (c) students in group A would end up with more utility. (d) students in group B would end up with more utility.

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter2: Systems Of Linear Equations

Section2.4: Applications

Problem 2EQ: 2. Suppose that in Example 2.27, 400 units of food A, 500 units of B, and 600 units of C are placed...

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