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Unformatted text preview: revenues received by wheat farmers increase or decrease? 3. Suppose that you own a summer home on a lake in Wisconsin, which provides both enjoyment and income. Say you rent the home out to vacationers on half of the summer weekends, and spend the remaining summer weekends enjoying the home yourself. If the summer rental rate that you can receive by renting your property increases, explain how income and substitution e f ects determine whether you increase or reduce the number of weekends you spend in Wisconsin. 4. True or false, and explain: In an Edgeworth Box diagram, if allocation A is Pareto optimal and allocation B is not Pareto optimal, then both consumers must prefer allocation A to allocation B. 1...
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 Spring '08
 YANG
 Economics, Microeconomics

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