Suppose $10 is to be allocated between two people, A and B. Their preferences over A’s income, x4, and B's income, xB , are the following: u^(x4, x#) = (x4)(xB + 2) and u³ (x4,xB) = (x4 + 4) (x³). Find the Pareto efficient income distributions.

Suppose $10 is to be allocated between two people, A and B. Their preferences over A’s income, x4, and B's income, xB , are the following: u^(x4, x#) = (x4)(xB + 2) and u³ (x4,xB) = (x4 + 4) (x³). Find the Pareto efficient income distributions.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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