If only two people are trading their endowments and no production is possible, then the equilibrium they reach will
A) be on their contract curve.
B) result in unequal marginal rates of substitution for the two people.
C) result in one person being worse off than with his or her endowment.
D) All of the above.
Question 2
Joey's Lawncutting Service rents office space from Joey's dad for 300 per month. Joey's dad is thinking of increasing the rent to 400 per month. As a result Joey's marginal cost of cutting grass will
A) increase by 100 divided by the amount of grass cut.
B) increase by 100.
C) decrease by 100.
D) not change.
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