Assume that there are only two goods in the economy: video games and water. The total amount of these goods are given, there is no production. The world is inhabited by two people: Ann and Bob. Assume that Ann and Bob have regular preferences (not necessarily same for Ann and Bob) over video games and water; and that they have some endowments of these two goods. Now a well-intentioned politician says that because water is scarce and it is a necessity, both Ann and Bob should get half of the overall water resources (and get to consume their respective endowments of video games). Is this likely to be an efϐicient policy
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Home » Business » Assume that there are only two goods in the economy: video games and water. The total amount of these goods are given, there is no production. The world is inhabited by two people: Ann and Bob.