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An economy produces only two goods: Beer and Whiskey (B and W). The only scarce resource is labour. There are 1,000 labour hours available in this economy. One labour hour produces either 100 litres of beer or 50 litres of whiskey. The citizens have utility functions of the form U(B, W) = BW.
State if the following statement is true, false, or uncertain. Explain your answer.
At every Pareto efficient allocation, the number of litres of beer produced equals the number of litres of whiskey produced.
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