If two individuals voluntarily agree to a transaction that only affects them (and no one else), it must be that the transaction is efficient.
Answer the following statement true (T) or false (F)
True
Rationale: If the two individuals agree voluntarily, then they must both believe the transaction makes them better off (or at least no worse off). If the transaction furthermore affects no one else, it means that the transaction has improved some people's (perceived) welfare without making anyone worse off.
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Suppose in Italy producers can make 10,000 dresses or 1,000 coats per day, while in Canada producers can make 14,000 similar dresses or 2,000 similar coats per day. Therefore
A) 1 dress costs 7 coats in Italy. B) 1 dress costs 10 coats in Italy. C) 1 coat costs 7 dresses in Canada. D) 1 coat costs 10 dresses in Canada.
The aggregate demand curve slopes downward indicating that:
a. an increase in the general price level will reduce the aggregate quantity of goods and services demanded. b. an increase in the general price level will increase the aggregate quantity of goods and services demanded. c. a change in the interest rate will alter the aggregate quantity of goods and services demanded. d. consumers substitute between domestic-made and foreign-made goods as their relative prices change.
Lump-sum taxes are rarely used in the real world because
a. while lump-sum taxes have low administrative burdens, they have high deadweight losses. b. while lump-sum taxes have low deadweight losses, they have high administrative burdens. c. lump-sum taxes are often viewed as unfair because they take the same amount of money from both poor and rich. d. lump-sum taxes are very inefficient.
The price of pens increases from $2 to $2.20. At the same time, the quantity of pens demanded decreases from 100 to 90. Demand for pens is:
A. perfectly inelastic. B. inelastic. C. unit elastic. D. elastic.