Question: This question basically asks you to compare the Arrow- Debrue model to the Dreze-Stern model. a. What features of the Arrow-Debrue model make it

This question basically asks you to compare the Arrow- Debrue model to the Dreze-Stern model. a. What features of the Arrow-Debrue model make it problematic to use in project evaluation ? b. How is the Dreze-Stern model more useful from a theoretical prespective for project evaluation ? c. In the D-S model we call the shadow price a sufficient statistic. Why? d. In general why do economists prefer shadow prices over market prices when evaluating a policy?

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