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

question 6

Multiple Choice

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

• A)None of them.
• B)Only I.
• C)I and II,but not III.
• D)I and III,but not II.
• E)All of them.

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Definitions:

Antitrust Policy

Regulations and laws designed to promote competition and prevent monopolies and unfair practices in the marketplace.

Oligopolists

Firms that are part of an oligopoly, a market structure characterized by a small number of firms that have significant control over market prices and competition.

Homogeneous Product

A product that is viewed as identical no matter who produces it, making it impossible for consumers to distinguish between products based on brand or quality.

Peach Suppliers

Businesses or individuals that provide peaches to the market, contributing to the supply of this specific type of fruit.