Jupiter likes moons more than rings and gets marginal utility worth $5 from the last moon, and $2 from the last ring. Saturn prefers rings, getting MU = $3 from the last ring and $1 from moons. Describe a trade that would increase efficiency.
What will be an ideal response?
Jupiter could trade a ring to Saturn. Saturn would be willing to trade up to three moons. Jupiter would accept a minimum of 0.4 moons and would certainly accept one or more moons. As the trade takes place, MU decreases for the acquired good and increases for the sacrificed good until Jupiter and Saturn have equal MU of rings and of moons.
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