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SIMON FRASER ECON290 Tut2

SIMON FRASER ECON290 Tut2 - 4 Why might individuals support...

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Economics 290: Canadian Microeconomic Policy Tutorial #2 (Week of January 18) 1. Is it possible to have a Pareto efficient allocation where someone is worse off than he is at an allocation that is not Pareto efficient? 2. Is it possible to have a Pareto efficient allocation where everyone is worse off than they are at an allocation that is not Pareto efficient? 3. True or false? If we know economy is efficient in production, then we know the output of each product.
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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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