If an Allocation Is Pareto Optimal and If Indifference Curves

question 6

Multiple Choice

If an allocation is Pareto optimal and if indifference curves between the two goods have no kinks, then

• A)two consumers who consume both goods must have the same MRS between them, but consumers may consume the goods in different ratios.
• B)two consumers with the same income who consume both goods must have the same MRS, but if their incomes differ, their MRSs may differ.
• C)any two consumers who consume both goods must consume them in the same ratio.
• D)for any two consumers who consume both goods, neither will prefer the other consumer's bundle to his own.
• E)all consumers receive the bundle that they prefer to any other bundle the economy could produce for them.

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Definitions:

Contemporary Perspective

Present-day viewpoints or methods of understanding in a particular field, often considering the latest research and developments.

Daily Basis

The frequency of something happening or being performed every day.

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The process of developing attributes, skills, and experiences that mark the transition from childhood into adult roles and responsibilities.

Growth Spurt

A rapid increase in height and weight typically observed during adolescence due to hormonal changes.