Is point E Pareto efficient allocation? Explain your answer. Consider the diagram below which depicts a two-household communityconsisting of household A and household B. The quantity of public good ismeasured along the horizontal axis and the share of tax paid by HHA andHHB measures the share of tax paid by HHA and HHB.100%O'A's shareof taxesB's shareof taxesDA100%

Yes. Point E is Pareto efficient allocation.

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Is point E Pareto efficient allocation? Explain your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Is point E Pareto efficient allocation? Explain your answer.

Consider the diagram below which depicts a two-household community
consisting of household A and household B. The quantity of public good is
measured along the horizontal axis and the share of tax paid by HHA and
HHB measures the share of tax paid by HHA and HHB.
100%
O'
A's share
of taxes
B's share
of taxes
DA
100%

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