Tom Currently Has 100 Units of X₁ and 50 Units

question 11

Multiple Choice

Tom currently has 100 units of x₁ and 50 units of x₂, and Jan has 50 units of x₁ and 100 units of x₂. If Tom's marginal rate of substitution is 10, and Jan's is 1:

• A)Pareto- improving trades involve Jan giving up x₂ for x₁.
• B)Pareto- improving trades involve Tom giving up x₁ for x₂.
• C)Pareto- improving trades between Jan and Tom do not exist.
• D)Pareto- improving trades exist but cannot be assessed given the above information.

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