Podcast
Questions and Answers
What happens to Angela's reservation indifference curve when Bruno can no longer coerce her to work?
What happens to Angela's reservation indifference curve when Bruno can no longer coerce her to work?
- It shifts upwards. (correct)
- It shifts downwards.
- It becomes steeper.
- It remains unchanged.
Which condition indicates that Bruno is maximizing his benefit from Angela's work?
Which condition indicates that Bruno is maximizing his benefit from Angela's work?
- MRT = output of grain
- MRS = MRT (correct)
- MRS > MRT
- MRS < MRT
What is a key difference in Angela's situation between Rule 2 and Rule 3?
What is a key difference in Angela's situation between Rule 2 and Rule 3?
- Angela's output of grain is higher in Rule 2.
- Angela has a higher utility in finding work elsewhere in Rule 3. (correct)
- Angela is forced to work in Rule 3.
- Angela can negotiate better contract terms in Rule 2.
What is the implication of the feasible set remaining unchanged under Rule 3?
What is the implication of the feasible set remaining unchanged under Rule 3?
How does giving Angela more free time benefit Bruno?
How does giving Angela more free time benefit Bruno?
Under the rules established in Rule 3, which condition must Angela meet if she wants to farm Bruno's land?
Under the rules established in Rule 3, which condition must Angela meet if she wants to farm Bruno's land?
What happens to Angela's reservation indifference curve when the government agrees to laborers' demands?
What happens to Angela's reservation indifference curve when the government agrees to laborers' demands?
What effect does the government agreement have on the feasible set for Bruno's contracts with Angela?
What effect does the government agreement have on the feasible set for Bruno's contracts with Angela?
In terms of Pareto efficiency, which statement is true under the conditions set by Rule 4?
In terms of Pareto efficiency, which statement is true under the conditions set by Rule 4?
Which of the following best describes the feasible frontier under the new rules of Rule 4?
Which of the following best describes the feasible frontier under the new rules of Rule 4?
What is the wage Angela receives under the conditions of Rule 3?
What is the wage Angela receives under the conditions of Rule 3?
Which statement best reflects the relationship between Angela and Bruno after the implementation of Rule 4?
Which statement best reflects the relationship between Angela and Bruno after the implementation of Rule 4?
What aspect of the labor conditions is specifically improved by the government agreement in Rule 4?
What aspect of the labor conditions is specifically improved by the government agreement in Rule 4?
What does Angela’s reservation utility represent in the context of her agreement with Bruno?
What does Angela’s reservation utility represent in the context of her agreement with Bruno?
How does the introduction of Bruno change the bargaining dynamics for Angela?
How does the introduction of Bruno change the bargaining dynamics for Angela?
What is the optimal quantity of grain Angela produces in the scenario presented?
What is the optimal quantity of grain Angela produces in the scenario presented?
What does the feasible frontier indicate in Angela's production scenario?
What does the feasible frontier indicate in Angela's production scenario?
How does the optimal choice for Angela balance her work time and production?
How does the optimal choice for Angela balance her work time and production?
What change occurs in Angela’s claim on the harvest when she gains the right to vote?
What change occurs in Angela’s claim on the harvest when she gains the right to vote?
What does Pareto efficiency imply in the allocation of resources between Angela and Bruno?
What does Pareto efficiency imply in the allocation of resources between Angela and Bruno?
At allocation D, how is the grain divided between Angela and Bruno?
At allocation D, how is the grain divided between Angela and Bruno?
Flashcards are hidden until you start studying
Study Notes
Rule 1
- Angela, a farmer, works the land and gets everything she produces
- Angela owns the land.
- Optimal choice: Angela works 8 hours and receives 46 bushels of grain.
Rule 2
- Bruno appears, he doesn't farm but wants a share of the harvest and can force Angela to work for him.
- The feasible frontier remains unchanged as Bruno doesn't work.
- Bruno can get the most grain when MRS (marginal rate of substitution) = MRT (marginal rate of transformation).
Rule 3
- The rule of law replaces the rule of force.
- Bruno can no longer coerce Angela to work, but he owns the land.
- Angela must agree to pay Bruno a share of the harvest to farm his land.
- The feasible frontier remains unchanged.
- Angela's reservation indifference curve shifts up due to a better outside option.
- Bruno chooses the allocation where MRS = MRT, offering a contract for Angela to work 8 hours and receive 23 bushels of grain.
Rule 4
- Angela and other farmers achieve the right to vote and pass legislation that increases their claim on the harvest.
- Regulations are implemented: working hours limited to 4.5 hours and a minimum wage of 23 bushels of grain.
- The feasible set is now more limited.
- Bruno must offer a contract that complies with the new regulations, which means allocation L is no longer feasible.
- Angela's reservation indifference curve shifts up due to improved conditions.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
