Pareto preferred to the initial allocation

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Reference no: EM139266

Q. Q1. Consider two persons (Ann and Bill) and two-goods(X and Y) exchange economy. The total endowment of the economy is given by X=200 and Y=100. Assume Ann has an initial allocation of 100 units of X and 50 units of Y. She regards X and Y as perfect 1-for-1 complements, always wanting to consume 1 unit of X for every unit of Y. Illustrate diagrammatically the set of allocations that are Pareto preferred to the initial allocation.

Q2. Illustrate what are the main pros and cons of the two strategies, Austerity Economics and monetary & fiscal policies, to grow out of the economic crisis in EU?

Reference no: EM139266

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