Unformatted text preview: 4. Why might individuals support the status quo over policies that can be shown to increase efficiency? 5. The current input bundles used by Food manufacturer and Clothing producer are illustrated in the two diagrams. Is the current allocation of labor and capital between two firms efficient? If yes, briefly explain why. If no, please show how to make Pareto improvement. L K F=25 MRTS = 2 L K C=5 MRTS = 1/2...
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- Spring '06
- J Liu
- Economics, Pareto efficient allocation, Canadian Microeconomic Policy