The figure below shows Angela and Bruno's feasible frontier, Angela's biological survival constraint, and her reservation indifference curve, when Angela would accept any offers strictly better than her reservation position of no work and 2.5 bushels of survival rationts from the government. Angela's biological survival constraint 4. Angela's reservation indifference curve 12 Feasible frontier: Angela and Bruno combined Economically feasible set 2.5- Angela's reservation option 24 Angela's hours of free time Now consider the case where Angela cares about the fairness of distribution, such that she can reject an offer that she considers unfair and choose not to work. In such a case Bruno will also receive no income. Then, compared to the reservation indifference curve depicted above, Angela's new reservation indifference curve is: O The midpoint between the feasible frontier and the biological survival constraint. O Shifted higher at all points. O Steeper and goes through Z. O The same. Bushels of grain

The figure below shows Angela and Bruno's feasible frontier, Angela's biological survival constraint, and her reservation indifference curve, when Angela would accept any offers strictly better than her reservation position of no work and 2.5 bushels of survival rationts from the government. Angela's biological survival constraint 4. Angela's reservation indifference curve 12 Feasible frontier: Angela and Bruno combined Economically feasible set 2.5- Angela's reservation option 24 Angela's hours of free time Now consider the case where Angela cares about the fairness of distribution, such that she can reject an offer that she considers unfair and choose not to work. In such a case Bruno will also receive no income. Then, compared to the reservation indifference curve depicted above, Angela's new reservation indifference curve is: O The midpoint between the feasible frontier and the biological survival constraint. O Shifted higher at all points. O Steeper and goes through Z. O The same. Bushels of grain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Refer to Figure 11-1. Assuming that higher education spending means better quality, how many families will receive lower quality education because of the government providing public education?
Angela works on farmland owned by Bruno. The diagram illustrates their joint feasible frontier. Angela's indifference curves are all assumed to have an identical slope, for any given amount of free time. This means that they are all parallel. Angela and Bruno can bargain costlessly. Bushels of grain 8 12 Angela's reservation indifference curve, IC₁ IC₂ D 0 0 16 Angela's hours of free time 20 24 Feasible frontier: Angela and Bruno combined a) Assume that Angela's reservation option is at point F. Explain the meaning of "Pareto efficient" and give two ways that we know that point F is not Pareto-efficient. Explain why moving between point F and point E would not improve efficiency. (4 marks) b) How might Angela and Bruno achieve a Pareto-efficient outcome? Explain how the negotiation might work. Use indifference curves to show where this outcome will be on the diagram. (3 marks) c) Explain why it would not be Pareto-efficient to simply aim to produce the maximum total amount of grain,…
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