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Pareto efficiency

 
 
AB14
 
Reply Sun 3 Dec, 2017 11:36 am
A cake of weight 1 kg is to be shared between two consumers X and Y. A consumption vector is denoted by (x, y) where x is the consumption in kg by consumer X and y is the consumption in kg by consumer Y. Which of the following statements is true based on this information?

(a) (0, 1) is a Pareto efficient and fair allocation of the cake
(b) (0·5, 0-4) is a Pareto inefficient but fair allocation of the cake
(c) (0·5, 0·5) is a Pareto efficient and fair allocation of the cake
(d) None of the above
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