Two Individuals $\mathrm { A }$ And $\mathrm { B }$ , Consume Two Goods

question 44

Multiple Choice

Two individuals, $\mathrm { A }$ and $\mathrm { B }$ , consume two goods, $x$ and $y$ . Consumer $\mathrm { A }$ initially has 3 units of $x$ and 2 units of $y$ . Consumer B initially has 5 units of $x$ and 6 units of $y$ . Also, for Consumer A the $M R S _ { x , y } ^ { A } = \frac { 5 x } { 3 y }$ and for Consumer $\mathrm { B }$ the $M R S _ { x , y } ^ { B } = \frac { 3 x } { y }$ . Does this initial allocation of $x$ and $y$ represent an efficient allocation?

• A) Yes
• B) No, because both consumers could be made better off by giving A more \(x\) and less \(y\).
• C) No, because both consumers could be made better off by giving A more \(y\) and less \(x\).
• D) Cannot be determined from the given information.

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Definitions:

Fewer

A comparative term used to indicate a smaller number of items, people, or entities in one group or category compared to another.

Diets

Regulated eating plans or patterns of food consumption, often aimed at achieving a specific health goal.

Plantations

Large farms in the Southern United States that mainly grew cash crops like tobacco, cotton, and sugar, often relying on slave labor before the Civil War.

Solely

Only; not involving anyone or anything else.