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Author Question: Why does perfect competition guarantee a Pareto optimal distribution of goods between two people? ... (Read 64 times)

pragya sharda

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on: Jul 1, 2018
Why does perfect competition guarantee a Pareto optimal distribution of goods between two people? Under perfect competition,
 
  A) everyone has the same preferences.
  B) everyone faces the same prices.
  C) everyone consumes the same quantity of both goods.
  D) goods are homogeneous.

Question 2

Let P be the output price for a particular good. Why is the value PMPL greater than MRPL for a monopolist?
 
  A) The monopolist is not as technically efficient as firms operating under perfect competition.
  B) The monopolist hires less labor, so MPL is higher under a monopoly than under perfect competition.
  C) The monopolist sets a price that is higher than MR.
  D) A and C are correct.
  E) B and C are correct.


elizabethrperez

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Reply #1 on: Jul 1, 2018
Answer to Question 1

B

Answer to Question 2

E


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