On a Certain Island There Are Only Two Goods, Wheat

question 10

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 16 units of milk or 31 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) total milk production is 8,000 units.
• C) all citizens consume the same commodity bundle.
• D) every consumer's marginal rate of substitution between milk and wheat is -1.
• E) None of the above is true at every Pareto optimal allocation.

---

Definitions:

Bronchi

The main passageways directly attached to the lungs that allow the passage of air in and out of the lungs.

Alveoli

Tiny air sacs within the lungs where gas exchange between the air and blood occurs.

Dalton's Law

The principle that the total pressure exerted by a mixture of gases is equal to the sum of the pressures that each would exert if it were present alone.

Partial Pressures

The pressure that a single gas in a mixture of gases would exert if it alone occupied the entire volume of the mixture.