QUESTION 3 (15 MARKS) You are now asked to consider a world with two people, Jane...

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QUESTION 3 (15 MARKS) You are now asked to consider a world with two people, Jane and Jack. Jack is a farmer. Jane owns the land on which Jack farms and does not produce any output herself. There is only one good in this world, grain. a. Use a model of decision making under scarcity to show the allocation that maximises Jane's economic rent when she can coerce Jack. Label all relevant axes, points and curves on your model. (5 marks) b. Use a separate model of decision making under scarcity to show the set of Pareto efficient allocations result from Jack being able to bargain with Jill, but with Jill still being able to make a take-it-or-leave-it offer. Label all relevant axes, points and curves on your : marks) model. (5 c. Thinking in general terms now, explain why a point on the biological survival constraint is lower when a person has more hours of free time. Why does the curve also get flatter when a person works less? [max words: 150] (3 marks) d. Again, thinking in general terms, explain the difference between a biologically feasible set and an economically feasible set. [max words: 150] (2 marks) QUESTION 3 (15 MARKS) You are now asked to consider a world with two people, Jane and Jack. Jack is a farmer. Jane owns the land on which Jack farms and does not produce any output herself. There is only one good in this world, grain. a. Use a model of decision making under scarcity to show the allocation that maximises Jane's economic rent when she can coerce Jack. Label all relevant axes, points and curves on your model. (5 marks) b. Use a separate model of decision making under scarcity to show the set of Pareto efficient allocations result from Jack being able to bargain with Jill, but with Jill still being able to make a take-it-or-leave-it offer. Label all relevant axes, points and curves on your : marks) model. (5 c. Thinking in general terms now, explain why a point on the biological survival constraint is lower when a person has more hours of free time. Why does the curve also get flatter when a person works less? [max words: 150] (3 marks) d. Again, thinking in general terms, explain the difference between a biologically feasible set and an economically feasible set. [max words: 150] (2 marks)

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a In a scenario where Jane can coerce Jack she maximizes her economic rent by ensuring Jack produces ... View the full answer