Citizens of Veridiania love eating and looking the flowers that grow in the town center. The workers in Veridiania can spend their time planting and tending flowers to enjoy or growing food for consumption. A worker in Veridiana can grow 2 bushels of food in a day or tend 100 flowers. The 15 residents of the city are each willing to forgo the consumption of 1 bushel of food for the enjoyment of 500 extra flowers. What are the private and public goods in this example? What is the MRS=MUfood/MUflowers? (How many flowers are they willing to give up to get one more bushel of food?) What is the MRT=MCfood/MCflowers (What is the cost of one bushel of food in terms of flowers given up? Is this allocation Pareto efficient? Should workers spend more or less time planting flowers? Why? If this allocation is not P.E., is government intervention necessary? Why or why not?
Citizens of Veridiania love eating and looking the flowers that grow in the town center. The workers in Veridiania can spend their time planting and tending flowers to enjoy or growing food for consumption. A worker in Veridiana can grow 2 bushels of food in a day or tend 100 flowers. The 15 residents of the city are each willing to forgo the consumption of 1 bushel of food for the enjoyment of 500 extra flowers.
What are the private and public goods in this example?
What is the MRS=MUfood/MUflowers? (How many flowers are they willing to give up to get one more bushel of food?) What is the MRT=MCfood/MCflowers (What is the cost of one bushel of food in terms of flowers given up?
Is this
If this allocation is not P.E., is government intervention necessary? Why or why not?
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