Suppose Jack waits in line and gets in to see a movie he values at $6, while Sam, farther back in line, does not get to see the movie he values at $12 because the theater fills up. Which of the following statements is true?
A)The movie theater management needs to install more seats.
B)Pareto efficiency is a concept that is not applicable here.
C)Pareto efficiency is achieved because Jack can tell Sam about the movie.
D)Jack must have stolen his ticket from Sam.
E)Pareto efficiency is not achieved.

Question

Quizplus · Accepted Answer

Pareto efficiency requires that one individual cannot be made better off without making another individual worse off. In this case, Sam is worse off because he did not get to see a movie he valued at $12. Therefore, Pareto efficiency is not achieved. Option A is not necessarily true as the theater could have limited seating for various reasons. Option B is incorrect as Pareto efficiency is applicable but not achieved. Option C is not relevant as Jack telling Sam about the movie does not make Sam better off in this scenario. Option D is baseless and not mentioned in the given information.

Suppose Jack Waits in Line and Gets in to See