Commuters have the option to use either their car or a metro for their daily commute. Commuting by metro takes 50 minutes regardless of the number of commuters using the metro. Commuting by car takes C(x) = 40+ 20x minutes, where x is the proportion of commuters using their cars, 0 < = x <= 1. Which of the following statement is false? a. Equilibrium allocation is not Pareto optimal because of the negative externality b. In the equilibrium, it takes 50 minutes to commute for all commuters c. In the equilibrium, 50% of the commuters use their cars d. none of the above e. in the Pareto optimal allocation, 25%
Commuters have the option to use either their car or a metro for their daily commute. Commuting by metro takes 50 minutes regardless of the number of commuters using the metro. Commuting by car takes C(x) = 40+ 20x minutes, where x is the proportion of commuters using their cars, 0 < = x <= 1. Which of the following statement is false? a. Equilibrium allocation is not Pareto optimal because of the negative externality b. In the equilibrium, it takes 50 minutes to commute for all commuters c. In the equilibrium, 50% of the commuters use their cars d. none of the above e. in the Pareto optimal allocation, 25%
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Commuters have the option to use either their car
or a metro for their daily commute. Commuting by
metro takes 50 minutes regardless of the number of
commuters using the metro. Commuting by car
takes C(x) = 40+ 20x minutes, where x is the
proportion of commuters using their cars, 0 < = x
<= 1. Which of the following statement is false?
a. Equilibrium allocation is not Pareto optimal
because of the negative externality
b. In the equilibrium, it takes 50 minutes to
commute for all commuters
c. In the equilibrium, 50% of the commuters use
their cars
d. none of the above
e. in the Pareto optimal allocation, 25%
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