Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land. The figure shows Angela and Bruno's feasible frontier, Angela's biological survival constraint and her reservation indifference curve. Currently, if Angela does not work she receives a ration of 2.5 bushels from the government. Of the four depicted in the figure, which allocation strictly Pareto dominates Z? Angela's biological survival constraint Angela's reservation indifference curve 12. (c) Feasible frontier: Angela and Bruno combined (b). (d) (a) 2.5++ Z: Angela's reservation option 0. 24 Angela's hours of free time (a) b. (b) a. с. (с) d. (d) N Bushels of grain

Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land. The figure shows Angela and Bruno's feasible frontier, Angela's biological survival constraint and her reservation indifference curve. Currently, if Angela does not work she receives a ration of 2.5 bushels from the government. Of the four depicted in the figure, which allocation strictly Pareto dominates Z? Angela's biological survival constraint Angela's reservation indifference curve 12. (c) Feasible frontier: Angela and Bruno combined (b). (d) (a) 2.5++ Z: Angela's reservation option 0. 24 Angela's hours of free time (a) b. (b) a. с. (с) d. (d) N Bushels of grain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Welfare Analysis

Welfare analysis of the society is related to welfare economics. From the economic point of view former welfare economics refers to that subject which uses the techniques of microeconomics to analyse and evaluate the welfare at the economic or aggregate level.

Question

Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land.
The figure shows Angela and Bruno's feasible frontier, Angela's biological survival constraint and her reservation
indifference curve. Currently, if Angela does not work she receives a ration of 2.5 bushels from the government. Of
the four depicted in the figure, which allocation strictly Pareto dominates Z?
Angela's biological survival
constraint
Angela's reservation
indifference curve
12
(c)
Feasible frontier: Angela and
Bruno combined
(b).
(d)
Z: Angela's reservation
option
2.5+T
24
Angela's hours of free time
(a)
b. (b)
(c)
d. (d)
а.
C.
Bushels of grain

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Angela works on farmland owned by Bruno. The diagram illustrates their joint feasible frontier. Angela's indifference curves are all assumed to have an identical slope, for any given amount of free time. This means that they are all parallel. Angela and Bruno can bargain costlessly. Bushels of grain 8 12 Angela's reservation indifference curve, IC₁ IC₂ D 0 0 16 Angela's hours of free time 20 24 Feasible frontier: Angela and Bruno combined a) Assume that Angela's reservation option is at point F. Explain the meaning of "Pareto efficient" and give two ways that we know that point F is not Pareto-efficient. Explain why moving between point F and point E would not improve efficiency. (4 marks) b) How might Angela and Bruno achieve a Pareto-efficient outcome? Explain how the negotiation might work. Use indifference curves to show where this outcome will be on the diagram. (3 marks) c) Explain why it would not be Pareto-efficient to simply aim to produce the maximum total amount of grain,…
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