Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land. The figure shows Angela and Bruno’s feasible frontier, and Angela’s reservation indifference curve. If Angela does not work, she receives a ration of 2.5 bushels from the government. Which one of the following statements is correct?
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Question

Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land. The figure shows Angela and Bruno’s feasible frontier, and Angela’s reservation indifference curve. If Angela does not work, she receives a ration of 2.5 bushels from the government. Which one of the following statements is correct?

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Accepted Answer

The economically feasible set is the area between Angela’s reservation indifference curve and the feasible frontier.

Answer

Angela’s preferred allocation is where her reservation indifference curve crosses the feasible frontier.

Answer

Angela’s reservation indifference curve may not necessarily go through Z.

Crowdly

Bruno is a landowner and Angela is a farmer who pays a share of her grain output...

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