Hypothetical Outcomes (Payoffs) in a Game Table

Pareto Dominance

'Better Off' Refers to Subjective Preference in Economics

Two farms, a corn farm and a wheat farm, are the only employers in a rural county. They both decide to raise their hourly wages to attract more workers. At the end of the year, after accounting for all revenues and costs, the corn farm has made a profit of $200,000, and the wheat farm has made a profit of$150,000. Which of the following correctly identifies the allocation resulting from this economic interaction?

Identifying an Allocation from a Collaborative Project

Describing an Economic Allocation

Two companies, 'TechSolutions' and 'Digital Dynamics', collaborate on a project. Upon completion, TechSolutions receives a payment of $50,000 and Digital Dynamics receives$75,000. In this scenario, the term 'allocation' refers specifically and only to the $75,000 received by Digital Dynamics.

Match each economic interaction scenario with the allocation that correctly describes its outcome. An allocation must account for the distribution of value to all participants.

Two software developers, Alex and Ben, collaborate on creating a mobile app. In their first month after launch, the app generates $10,000 in revenue. Their prior agreement states that Alex receives 60% of the revenue and Ben receives 40%. Which of the following statements provides the most complete and accurate description of the allocation resulting from their first month's sales?

Company A and Company B are the final two bidders for a large construction contract. Company A bids low, securing the contract and earning a profit of $5 million. Because Company B did not win the contract, it incurred bidding costs of$100,000, resulting in a loss. Which of the following statements represents the complete allocation for this economic interaction?

Two competing firms, Innovate Corp and Pioneer Ltd, end the fiscal year with profits of $2 million and$3 million, respectively. The resulting distribution of profits, where Innovate Corp gets $2 million and Pioneer Ltd gets$3 million, is a specific example of an economic ____.

Analyzing the Completeness of an Economic Allocation

Three partners (X, Y, and Z) decide to dissolve their technology firm. The firm's total assets are sold for $900,000. Before distributing the proceeds, they must settle outstanding business liabilities amounting to$150,000. Their partnership agreement stipulates that remaining funds are to be split as follows: Partner X receives 50%, Partner Y receives 30%, and Partner Z receives 20%. Which of the following statements correctly describes the final allocation resulting from this interaction?

Pareto Incomparability of (I, I) and (T, I) Allocations in the Pest Control Game

Pareto Dominance

Limitations of Pareto Efficiency: Fairness and Desirability