Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank.

-Regarding the distribution of steak and wine in Figure 6-1,it is correct to say that:
A)at A,the marginal rates of substitution [MRSs] between steak and wine differ for Hank and Monica.
B)at A,Hank and Monica will engage in further trade which will eventually make one of them worse off.
C)at H,Monica is better off at Hank's expense.
D)trade between Monica and Hank will eventually lead them to the unique efficient outcome K.

Question

Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank.

-Regarding the distribution of steak and wine in Figure 6-1,it is correct to say that:
A)at A,the marginal rates of substitution [MRSs] between steak and wine differ for Hank and Monica. 
B)at A,Hank and Monica will engage in further trade which will eventually make one of them worse off. 
C)at H,Monica is better off at Hank's expense. 
D)trade between Monica and Hank will eventually lead them to the unique efficient outcome K.

Quizplus · Accepted Answer

At point A, the MRSs between steak and wine differ for Hank and Monica, as shown by the slope of their respective indifference curves. This means that they have different preferences and values for steak and wine, which can lead to further trade in the future. However, there is no indication that this will result in one of them being worse off or that trade will lead to the efficient outcome K. Option C is also incorrect, as it implies that one person's gain is the other person's loss, which is not necessarily true in this situation.

Use the Follwoing Figure to Answer the Questions : Figure