Question: Consider a two-period resource allocation model where the efficient allocation implies undiscounted total surplus of $58 and $40 in the first and second periods, respectively.

Consider a two-period resource allocation model where the efficient allocation implies undiscounted total surplus of $58 and $40 in the first and second periods, respectively. Assume the rate of return on investment is 25 percent. The smallest possible intergeneration transfer that will make the efficient resource allocation sustainable is:

a. $8.

b. $10.

c. $18.

d. $9.

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