Asked by
Tichina Sigmora
on Dec 04, 2024
Verified
Assume there are only two individuals in an economy, Lisa and Bart. The utility possibilities frontier for these individuals is given as: 120 = UL + UB
Where UL is Lisa's utility and UB is Bart's utility. Lisa's current level of utility is 20, Bart's level of utility is 90. This combination is:
A) inefficient.
B) economically efficient.
C) impossible, because it is outside of the welfare frontier.
D) none of the above
Utility Possibilities Frontier
A curve that shows the maximum feasible amount of two goods that can be produced with available resources and technology, indicating the trade-offs and efficiency in production.
Utility
In economics, utility refers to the satisfaction or pleasure derived by consumers from consuming goods or services.
Efficient
An attribute of a market or process where resources are allocated in the most effective way, yielding the maximum benefit for a given set of resources.
- Comprehend the principles of welfare economics, with a focus on the utility possibilities frontier and its role in illustrating efficient resource distribution.
Verified Answer
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Learning Objectives
- Comprehend the principles of welfare economics, with a focus on the utility possibilities frontier and its role in illustrating efficient resource distribution.