If the Initial Allocation of Goods Is Not Efficient, Consumers

question 74

Multiple Choice

If the initial allocation of goods is not efficient, consumers will:

• A) not be able to trade goods and achieve Pareto efficiency.
• B) buy and sell goods at market prices until the marginal rate of substitution is equalized across all consumers.
• C) be required to consume somewhere along their contract curve.
• D) change their tastes and preferences via their utility function to match the market's marginal rate of substitution.

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Definitions:

Joy

A feeling of great pleasure and happiness.

Affection

A feeling of fondness or liking.

Idea

A thought or suggestion as to a possible course of action or a conceptualization of something not yet reality.

Positive Emotions

Feelings that are generally good or beneficial, such as happiness, joy, and contentment, which can enhance well-being and relationships.