Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Brunofor the use of the land, where Bruno makes a take-it-or-leave-it offer. The figure showsAngela and Bruno's feasible frontier and Angela's reservation indifference curve. Now thegovernment introduces new laws that limits Angela's work time and/or sets a minimum pay inbushels of grain. If D is the outcome before any laws, which of the following statements iscorrect?Bushels of grain12-Angela's reservationindifference curve6.5-4.50+014 16GTAngela's hours of free time20 24Feasible frontier: Angelaand Bruno combined+N If the new law limits Angela's working hours to 4 hours, then the outcome will be F.If the new law sets the minimum pay to 4.5 bushels, then the outcome will be l.If the new law limits Angela's working hours to 8 hours and sets the minimum pay to 6.5 bushels, then theoutcome will be C.If the new law limits Angela's working hours to 10 hours and sets the minimum pay to 4.5 bushels, thenthe outcome will be D.

The feasible frontier indicates the trade-offs that an economy must make when distributing its…

Answered: Bruno is a landowner and Angela is a…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.12P

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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, where Bruno makes a take-it-or-leave-it offer. The figure shows
Angela and Bruno's feasible frontier and Angela's reservation indifference curve. Now the
government introduces new laws that limits Angela's work time and/or sets a minimum pay in
bushels of grain. If D is the outcome before any laws, which of the following statements is
correct?
Bushels of grain
12-
Angela's reservation
indifference curve
6.5-
4.5
0+
0
14 16
GT
Angela's hours of free time
20 24
Feasible frontier: Angela
and Bruno combined
+
N

If the new law limits Angela's working hours to 4 hours, then the outcome will be F.
If the new law sets the minimum pay to 4.5 bushels, then the outcome will be l.
If the new law limits Angela's working hours to 8 hours and sets the minimum pay to 6.5 bushels, then the
outcome will be C.
If the new law limits Angela's working hours to 10 hours and sets the minimum pay to 4.5 bushels, then
the outcome will be D.

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