Why might voters in a country choose a non-Pareto-optimal allocation over another that is Pareto optimal?
Answer to relevant QuestionsYour roommate is thinking of permanently drop-ping out of school this semester. If his tuition payment for this semester is non-refundable, should he take it into account when making his decision?How might a social critic respond to the claim that governmental involvement in the economy is unjustified because of the invisible hand theorem?A simple economy produces two goods, food and clothing, with two inputs, capital and labor. Given the current allocation of capital and labor between the two industries, the marginal rate of technical substitution between ...Suppose capital and labor is perfect substitutes in production for clothing: 2 units of capital or 2 units of labor produce 1 unit of clothing. Suppose capital and labor is perfect complements in production for food: 1 unit ...Ten identical consumers all have individual willingness-to-pay curves P = 5 – (1/20)Q for a public good—say, local parks (where P is measured in hundreds of dollars and Q is measured in acres). Construct and graph the ...
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