6. In a simple economy there are 2 inputs, each fixed in supply. These inputs are owned by two consumers. Inputs are used either in the production of x or of y. For simplicity you should assume there are only two firms. (a) Define the term 'Pareto Efficient (PE) Allocation." (b) What conditions must be satisfied for a PE allocation in this simple economy? List each separately

6. In a simple economy there are 2 inputs, each fixed in supply. These inputs are owned by two consumers. Inputs are used either in the production of x or of y. For simplicity you should assume there are only two firms. (a) Define the term 'Pareto Efficient (PE) Allocation." (b) What conditions must be satisfied for a PE allocation in this simple economy? List each separately

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

6. In a simple economy there are 2 inputs, each fixed in supply. These inputs are owned
by two consumers. Inputs are used either in the production of r or of y. For simplicity
you should assume there are only two firms.
(a) Define the term 'Pareto Efficient (PE) Allocation."
(b) What conditions must be satisfied for a PE allocation in this simple economy?
List each separately

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