If the initial allocation of goods is not efficient, consumers will: be required to consume somewhere along their contract curve. buy and sell goods at market prices until the marginal rate of substitution is equalized across all consumers. change their tastes and preferences via their utility function to match the market's marginal rate of substitution. not be able to trade goods and achieve Pareto efficiency.
If the initial allocation of goods is not efficient, consumers will: be required to consume somewhere along their contract curve. buy and sell goods at market prices until the marginal rate of substitution is equalized across all consumers. change their tastes and preferences via their utility function to match the market's marginal rate of substitution. not be able to trade goods and achieve Pareto efficiency.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 5SQ
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Transcribed Image Text:If the initial allocation of goods is not efficient, consumers will:
be required to consume somewhere along their contract curve.
buy and sell goods at market prices until the marginal rate of substitution is equalized across all consumers.
change their tastes and preferences via their utility function to match the market's marginal rate of substitution.
not be able to trade goods and achieve Pareto efficiency.
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