On a Certain Island There Are Only Two Goods, Wheat

question 13

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 10 units of milk or 16 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)all citizens consume the same commodity bundle.
• B)total milk production is 5,000 units.
• C)every consumer's marginal rate of substitution between milk and wheat is -1.
• D)the number of units of milk produced equals the number of units of wheat produced.
• E)None of the above is true at every Pareto optimal allocation.

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Definitions:

Transitory

Pertaining to or lasting for only a short period of time; temporary and fleeting in nature.

Unmodulated Color

A color that is consistent in hue and intensity across a surface, without gradation in tone or shade.

Medium

The material (for example, marble, bronze, clay, fresco) in which an artist works; also, in painting, the vehicle (usually liquid) that carries the pigment.

Humanity

The collective term for all human beings, or the qualities that characterize human beings, such as benevolence, compassion, and the ability to think and reason.