PS 01 - PROBLEM SET 1 - Economics 335 - (Materials from...

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PROBLEM SET 1 - Economics 335 - (Materials from Reading List Part I) J. Wissink Cornell University 1. Answer True, False, or Uncertain. Explain. a) If the assumptions of the First Fundamental Theorem of Welfare Economics were never violated there would be no role for the government in a capitalistic society. b) All Pareto efficient allocations dominate all inefficient allocations. c) If at some allocation it is true that: (1) MRS i x, y = MRS j x, y (2) s,t MRTS x = s,t MRTS y for all inputs s, t & for all goods x, y, THEN it must be true that (3) MRS common x, y = MRT social x, y at that particular allocation. Note: i and j are people; x and y are commodities; s and t are factors of production. d) If the initial endowment allocation in a pure exchange economy is Pareto efficient, then all consumers prefer their initial endowment to the core allocations. 2. Assume you are shipwrecked. There are ten of you in a lifeboat; you know that it will take
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This note was uploaded on 05/06/2008 for the course ECON 3350 taught by Professor Wissink during the Spring '08 term at Cornell University (Engineering School).

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PS 01 - PROBLEM SET 1 - Economics 335 - (Materials from...

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