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.

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