Consider Three Ways of Allocating Two Goods in a Two-Person

question 27

Multiple Choice

Consider three ways of allocating two goods in a two-person exchange economy. Which of these situations is efficient?
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.

• 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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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period.

Owner's Equity

The residual interest in the assets of a business after all liabilities have been deducted, often referred to as shareholder's equity or net worth.

Inventory Errors

Mistakes in the counting, recording, or valuation of inventory, which can lead to inaccuracies in financial statements.

Self-correct

The process of identifying and rectifying mistakes or errors in a document, data set, or system without external intervention.