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Show and explain how the distribution/allocation constraints are satisfied by any point in an Edgeworth-box diagram.
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- The production possibility frontier for X and Y consists of all the efficient allocations in the Edgeworth box. Explain why this is so. Also explain why inefficient points in the box would be inside the production possibility frontier.No more than 100 words for the answer: Explain, in your own words, the implications of the Positive Coase Theorem for the efficient allocation of property rights. As part of your answer, discuss the role played by transactions costs in the Coase Theorem.Illegal fishing activities are an indication of inefficient resource allocation. Do you agree with this statement? Explain your answer.
- Given a MC function and a MB funtion for a good (e.g., MC = 10 + Q, MB = 5 - Q ,how do we derive an efficient allocation for the good? What if we add a per-unit externality (e.g., set to some constant =5 per unit emissions from production)?Define negative and positive externalities and their effect on resource allocation.The production possibility frontier (PPF) in the Grossman model is as below. Individuals would never choose as an optimal allocation of Z and H. C B A E Hmin C E В N
- Outline and explain the conditions required to achieve economic efficiency in exchange, in production and in output markets. Explain why they represent Pareto-optimal allocation of resources.Q.2 How can we achieve pareto efficient allocation in case of consumption externality? Explain with an example.On the Edgeworth production box plot, what conditions must be met for an allocation to be on the production contract curve? Why is there a competitive equilibrium on the contract curve?
- Weel explained answer needed no Ai The Coase Theorem states that: a) As long as property rights are well defined and no transaction costs exist, an efficient allocation will result b)As long as property rights are well defined and transaction costs are high, an efficient allocation will result. c)An efficient allocation will be equitable to all parties concerned. d)Property rights should initially be assigned to those affected by a negative externality.Explain the difference between productive and allocation efficiency. How do you think a centrally planned economy versus a market economy would perform under each measure of efficiencyFigure shows the combined production function of Angela and Bruno. If the government introduces a new social welfare program to cater to the poor of the society, wherein the reservation wage increases from 2 bushels of wheat to 6 bushels of wheat how would you model the situation? Draw a new diagram to show the impact of this welfare program and comment on who do you think would benefit from this intervention? Additionally, does the outcome of this intervention results in an allocation which is a pareto efficient one? Explain your reasoning. (Please Make sure your diagram is fully labelled)
