Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade.The men are given food when they walk in and the women are given drink.Suppose they have identical preferences where food and drink provide utility .The exchange would be such that

Question

Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade.The men are given food when they walk in and the women are given drink.Suppose they have identical preferences where food and drink provide utility  .The exchange would be such that

Quizplus · Accepted Answer

The exchange would be such that both parties would benefit and be at least as well off as when they entered. Since the men were given food and the women were given drink, they would each prefer to have both. By trading, they can both receive what they desire and increase their utility. It is not guaranteed that one party would receive more than the other, so choices C and D are incorrect.

Suppose the Economics Department Has a Graduation Party for Its