Question: Suppose that an allocation is Pareto efficient, and that each individual only cares about his own consumption. Prove that there must be some individual that

Suppose that an allocation is Pareto efficient, and that each individual only cares about his own consumption. Prove that there must be some individual that envies no one, in the sense described in the text. (This puzzle requires some thought, but it is worth it.)

Step by Step Solution

★★★★★

3.39 Rating (171 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Suppose that this is not the case Then each individual envie... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Intermediate Microeconomics Questions!

Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = X *Y UB(X,Y) = X + 2Y The initial endowments are: A: X = 2; Y = 6 B: X = 2; Y = 2 a) Using an...

Your airplane crashes in the Pacific Ocean. You land on a desert island with one other passenger. A box containing 100 little bags of peanuts also washes up on the island. The peanuts are the only...

A little exchange economy has just two consumers, named Kenand Barbie, and two commodities, quiche and wine. Kens initial endowment is 3 units of quiche and 2 units of wine. Barbies initial endowment...

1. Suppose that an allocation is Pareto efficient and that each individual only cares about his own consumption. Prove that there must be some individual that envies no one. (HINT: Try a proof by...

Suppose that an allocation is Pareto efficient and that each individual only cares about his own consumption. Prove that there must be some individual that envies no one. (HINT: Try a proof by...

econ 28286... Exercise 10 In a certain economy there are two types of goods: agricultural goods (X) and industrial goods (Y). The production possibilities set in this economy can be described by Y...

2 is possible that some firms do not produce in a PE allocation. What can be said about which firms they are? c. Compare the levels of food consumption by different consumers in a given PE...

Problem 1 (25p). (Uncertainty and insurance) You are an owner of a luxurious sailing boat, worth $6, that you use for recreation on Mendota lake. Unfortunately, there is a good (50%) chance of a...

2 is possible that some firms do not produce in a PE allocation. What can be said about which firms they are? c. Compare the levels of food consumption by different consumers in a given PE...

Selected data of the Peninsula Company follow: As of December 31 Balance Sheet Data 20X2 20X1 Accounts receivable $ 671,000 $ 642,000 Allowance for doubtful accounts 31,000 22,000 Net accounts...

Sandy and Manny work for a non-profit and are charged with conducting some health and wellness workshops aimed to provide life style and knowledge for diabetics. To encourage commitment to the...

This type of risk is inherent in a firm s operations. A measure of the variability of a set of outcomes. This concept is based around the idea that investors will require higher rates of return as...

10. A simple approach to measuring yield curve risk, an approach commonly used by index managers, is an analysis of the cash flow distribution of a portfolio relative to a benchmark.

Wendy and Mac work in fast food restaurants. Wendy gets $4 an hour for the first 40 hours that she works and $6 an hour for every hour beyond 40 hours a week. Mac gets $5 an hour no matter how many...

Wally Piper is a plumber. He charges $10 per hour for his work and he can work as many hours as he likes. Wally has no source of income other than his labor. He has 168 hours per week to allocate...

Felicity loves her job. She is paid $10 an hour and can work as many hours a day as she wishes. She chooses to work only 5 hours a day. She says the job is so interesting that she is happier working...

Dantell Ltd is developing a new clothes dryer, Dry Master, that it plans to sell to coin-operated laundries. Currently, the market leader is a product called Lacy, which is sold by a competitor. The...

Let X1, ... , Xn~Poi(1). (a) Find the best CR for testing Ho: 1 = 2 and Ha: 1 = 5 Ans: 241=1 (X1) e3n S k 5 n In k - 3n i=1 In UIN Etz1(x;) 2 c since In is negative . (b) If n = 4 and Ho will be...

Ganado Europe (A). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 dropped in value from $1.1200/ to $0.9300/. Recalculate Ganado Europe's...