5 I, T 4 Bala's payoff 1, I 3 2 T.
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Question

Two farmers Anil and Bala are each deciding how to deal with pest insects that destroy the crops they cultivate in

their adjacent fields. They have the choice of using either Integrated Pest Control (IPC) or Terminator (T). The payoffs for their choices in terms of tonnes of crop are shown in the diagram. Which of the following statements is correct?

q1.png

Select one:

a. If Anil and Bala move from (T, T) to (I, I), there is Pareto-improvement as both farmers are better off.

b. (I, I) Pareto-dominates (I, T) as it is fairer.

c. (T, T) Pareto-dominates (I, I).

d. Pareto criterion tells us that (I, I) is the best outcome as it is Pareto-efficient.

e. There is only one Pareto-efficient outcome.

q1.png

5
I, T
4
Bala's payoff
1, I
3
2
T. T
T. I
I, I = Both use Integrated Pest Control (IPC)
1
T, T = Both use Terminator
T, I = Anil uses Terminator, Bala uses IPC
0
0
1
2
4
Un
I, T = Anil uses IPC, Bala uses Terminator
Anil's payoff

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