Consider an economy which is in general equilibrium. Ann and Bob are (the only) two consumers in an economy. They both consume both mu good x and good y. This implies that Consider the truth of the following two statements: O a. Both statements are false. mu O b. Only statement (i) is true. A O c. Both statements are true. O d. Only statement (ii) is true. mu B X (i) The equality is important with regards to efficiency because it implies that there are no Pareto Improving trades of x and y between Ann and Bob. B (ii) The equality is important with regards to efficiency because it implies that (for x and y) the prices that producers see reflect the (relative) values that consumers place on the goods. y
