On a Certain Island There Are Only Two Goods, Wheat

question 4

Multiple Choice

On a certain island there are only two goods, wheat and milk. The only scarce resource is land. There are 1,000 acres of land. An acre of land will produce either 3 units of milk or 32 units of wheat. Some citizens have lots of land; some have just a little bit. The citizens of the island all have utility functions of the form U(M, W) = MW. At every Pareto optimal allocation,

• A) the number of units of milk produced equals the number of units of wheat produced.
• B) all citizens consume the same commodity bundle.
• C) every consumer's marginal rate of substitution between milk and wheat is -1.
• D) total milk production is 1,500 units.
• E) None of the above is true at every Pareto optimal allocation.

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Definitions:

Selective Exposure

The tendency of individuals to prefer information or media experiences that align with their existing beliefs or attitudes, while avoiding contradictory information.

Selective Retention

The psychological process by which individuals remember information that is consistent with their beliefs and attitudes while forgetting information that contradicts them.

Selective Comprehension

The process by which individuals interpret information in a way that aligns with their existing beliefs or attitudes, often ignoring conflicting information.

Stimulus Discrimination

The process by which individuals learn to differentiate among similar stimuli and respond appropriately to each one.