Suppose a city can be described by the interval . Only two citizens, A and B, live in this city at different locations, A at 0.2 and B at 0.7. The government will set up a nuclear power plant but is yet to choose its location. Each citizen wants the plant as far as possible from her home, so both have utility , where is the distance between the plant and home. Find the set of Pareto optimal locations for the plant.
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Suppose a city can be described by the interval [0,1]. Only two citizens, A and B, live in this city at different locations, A at 0.2 and B at 0.7. The government will set up a nuclear power plant but is yet to choose its location. Each citizen wants the plant as far as possible from her home, so both have utility u(d)=d, where d is the distance between the plant and home. Find the set of Pareto optimal locations for the plant. (A) All locations in the interval [0,1] are Pareto optimal (B) All locations in the interval [0.2,0.7] are Pareto optimal (C) 0.5 is the only Pareto optimal location (D) 0 and 1 are the only Pareto optimal locations
Welfare economics and social choice has come up 62 times in 6 exams since 2004.
This question is on Pareto efficiency and Pareto improvements, part of Welfare economics and social choice in Microeconomics.
What it means for an allocation to be efficient, checked in exchange economies and other settings.
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Question from the DSE 2013 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.