Consider Three Ways of Allocating Two Goods in a Two-Person

question 21

Multiple Choice

Consider three ways of allocating two goods in a two-person exchange economy.
I.Both individuals take prices as given and equilibrium prices are established by an impartial auctioneer.
II.One individual can act as a perfect price discriminator and force the other individual to pay a different price for each unit of a good that is traded.
III.One individual is a monopolist and can charge the other individual a single,utility-maximizing price.
Which of these situations is efficient?

• A)None of them.
• B)Only I.
• C)I and II,but not III.
• D)I and III,but not II.

---

Definitions:

Republican Party

One of the two major contemporary political parties in the United States, traditionally supporting pro-business, conservative, and right-leaning policies.

Democratic Party

A major political party in the United States that historically has advocated for social welfare, civil rights, and governmental intervention in the economy to promote social justice.

Economic Opportunities

Prospects or chances for individuals or businesses to grow financially, commonly measured by income, employment possibilities, and market potential.

Free Blacks

Individuals of African descent who were legally free from slavery, significantly impacting societies and economies, especially in pre-Civil War America.