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Intermediate Microeconomics > ACCPT3 > Flashcards

ACCPT3 Flashcards

1
Q

When is an exhange economy efficient?

A

When MRSxy = px/py (-px/py is the slope)

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2
Q

What is consumption efficiency?

A

All points on the contract curve

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3
Q

What are the three conditions for Pareto efficiency in the production and exchange economy?

A

1) Exchange efficiency = MRSxy = px/py
2) Production efficiency = MRTSlk = w/r
3) Allocative efficiency = MRSxy = MRTxy
All combined give us px/py = MCx/MCy

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Intermediate Microeconomics (7 decks)

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