Mr.X values a good at $100 and buys it from Mr.Y at $80 (who produces it at a cost of $70).Mr.Z then offers Mr.X the same good at $60.Mr.X buys the good from Mr.Z,and stops buying it from Mr.Y.Which of the following makes this event Pareto optimal?

Question

Quizplus · Accepted Answer

Mr. X gives Mr. Y $11 makes this event Pareto optimal because it makes both Mr. X and Mr. Y better off without making Mr. Z worse off. Mr. X gets the good for $60, which is less than he was willing to pay for it ($100). Mr. Y gets $11, which is more than he would have gotten if he had sold the good to Mr. Z ($0). Mr. Z is not affected by the transaction.

MrX Values a Good at $100 and Buys It from Mr.Y