15. There is a shortage of bottled water in California, and the governor decides that the government distributes equal quantities of bottled water to each person and at no cost to the consumers. Consumers are not allowed trade or give their water to other people. Is this distribution of water Pareto efficient? a. Yes, because each person has the same amount of water. b. Yes, because everyone receives water for free c. Not if people have different marginal rates of substitution between water and other goods. d. It is impossible to determine without knowing the price of water and income of goods.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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15. There is a shortage of bottled water in California, and the governor
decides that the government distributes equal quantities of bottled water to
each person and at no cost to the consumers. Consumers are not allowed
trade or give their water to other people. Is this distribution of water Pareto
efficient?
a. Yes, because each person has the same amount of water.
b. Yes, because everyone receives water for free
c. Not if people have different marginal rates of substitution between
water and other goods.
d. It is impossible to determine without knowing the price of water and
income of goods.
Transcribed Image Text:15. There is a shortage of bottled water in California, and the governor decides that the government distributes equal quantities of bottled water to each person and at no cost to the consumers. Consumers are not allowed trade or give their water to other people. Is this distribution of water Pareto efficient? a. Yes, because each person has the same amount of water. b. Yes, because everyone receives water for free c. Not if people have different marginal rates of substitution between water and other goods. d. It is impossible to determine without knowing the price of water and income of goods.
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