DSE 2012-allocation clarification

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L14
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DSE 2012-allocation clarification

L14
DSE 2012 Qn:27
Whats the answer for this one? Its given the answer is c. But I'm getting d.

At pareto optimal choice, slope of both utility curves are same.
MRS(A)=MRS(B)
MRS(A)=1
MRS(B)=MUx/MUy= x/y
=> B should consume x and y in equal ratio, which is Allocation 2.
How is the answer c?
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Re: DSE 2012-allocation clarification

SoniaKapoor
Hi Ben the answer is c only....
you can find a pt where consumer is better off fir allocation 2 ...thats y
MA Economics
DSE
2014-16
L14
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Re: DSE 2012-allocation clarification

L14
In reply to this post by L14
Thanks Sonia, got it!