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(Next three questions)
Two consumers A and B. Two goods x and y. A and B each owns 100 units of y and A owns 12 units of x and B owns 3 units of x. U1= y + 60x -2x2 and U2= y + 30x – x2 . A proposes that he will trade one unit of good x to B in exchange for some units of y. How many units of y, B should give to A, so that they both are better off?
a) Any payment between 16 ≤ t ≤ 22
b) Any payment between 12 ≤ t ≤ 24
c) Both of the above
d) None of the above
Note that if payment is very close to 12 then ..... is worse off or close to 24 then ...... is worse off (Hint: worse off as compared to the original utility)
a) B, A respectively
b) A,B respectively
c) This statement is wrong, both are better off.
d) None of the above
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The example of set of (internal) Pareto efficient points
a) (xA,yA) = (10,100) and (xB, yB)= (5,100)
b) (xA,yA) = (5,150) and (xB, yB)= (10,50)
c) (xA,yA) = (11,75) and (xB, yB)= (4,125)
d) (xA,yA) = (4,50) and (xB, yB)= (11,150)
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