On a certain island there are only two goods, wheat and milk. The only scarce resource is land. There are 1,000 acres of land. An acre of land will produce either 3 units of milk or 7 units of wheat. Some citizens have lots of land; some have just a little bit. The citizens of the island all have utility functions of the form U(M, W) = MW. At every Pareto optimal allocation,
A) the number of units of milk produced equals the number of units of wheat produced.
B) all citizens consume the same commodity bundle.
C) total milk production is 1,500 units.
D) every consumer's marginal rate of substitution between milk and wheat is -1.
E) None of the above is true at every Pareto optimal allocation.
Correct Answer:
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