You Value Your Favorite Shirt at $110

question 21

Multiple Choice

You value your favorite shirt at $110. Someone else values it at $150, and that person is willing to pay you $120 for your shirt. Would selling your shirt to this person for $120 be Pareto efficient?

• A) No, because you did not receive the maximum amount the other person would have been willing to pay for the shirt.
• B) No, the person paid you $120 for the shirt so his net benefit was $30, while your net benefit was $10. For this change to be Pareto efficient, each of you should have the same net benefit.
• C) Yes, because even though you gain from the trade and he loses, there is the potential for you to compensate him for his loss.
• D) Yes, because both of you are better off as a result of the trade.

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Definitions:

Agoraphobia

An anxiety disorder characterized by an intense fear of being in situations where escape might be difficult or that help wouldn't be available if things go wrong.

Anxiety Disorders

Mental health disorders characterized by significant anxiety or fear that interferes with normal functioning.

Panic Disorder

A mental health condition characterized by sudden, repeated episodes of intense fear or terror that reach a peak within minutes.

Intense Fear

A profound feeling of dread or terror, often with a strong desire to escape the situation causing it.