Which of the following statements about efficiency is/are TRUE? I. If, given some initial allocation, we are unable to implement a change that makes at least one person better off and no-one worse off, then the current allocation is efficient. II. An allocation is inefficient if we are able to reallocate in such a way that makes one person better off without making anyone else worse off. III. If we reallocate such that at least one person is better off and no one is wor off, then the situation after the reallocation will be efficient.

Question 6 Listen Efficient resource allocation should be accomplished when any production of a product shows the marginal benefit outweighs marginal cost of its output. 1) True 2) False Question 7 ) Listen If we say that two variables are inversely related, this means that an increase in one variable is associated with a decrease in the other. 1) True 2) False Question 8 ) Listen Consider the problem Amy faces of how to allocate her weekly allowance between books and videos. An increase in Amy's allowance will a) shift her budget line to the right b) rotate her budget line, allowing her to buy more videos but not more books c) rotate her budget line, allowing her to buy more books but not more videos O d) shift her budget line to the left

Consider two people in the market for tilapia, Reagan and Cheryl. The marginal benefit curves for both individuals are shown in the accompanying graph. a. Suppose the market price of tilapia is $2.00 per pound. Move point A to Cheryl’s quantity purchased. Move point B to Reagan’s quantity purchased. b. How many pounds of tilapia do they collectively purchase?   _________ pounds   c. To achieve an efficient allocation, Cheryl should purchase _______(more tilapia than, the same amount of tilapia as, less tilapia than)     she is currently purchasing, and Reagan should purchase ________ (more tilapia than, the same amount of tilapia as, less tilapia than) she is currently purchasing.

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