Efficiency and Income Distribution
Consider a two-person economy where an efficient allocation of a good is being determined. Contrast the set of efficient quantities of the good that would arise if the individuals' marginal valuation for the good is independent of their income, versus a scenario where their marginal valuation for the good changes with their income. In your answer, explain the underlying mechanism that causes the difference between the two scenarios.
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Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
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