[size=12.000000pt]This problem set is an effort to encourage you to review the intermediate microeconomicsconcepts and tools that are used to evaluate environmental problems from an economicperspective. Many of these concepts will be utilized throughout the remainder of the course.[size=12.000000pt]Please submit your solutions by the indicated date and hour to the departmental office.
                               
                       
                                                                                                                                               
                               
                                                                        [size=12.000000pt]1.For each of the following scenarios, state whether or not the allocation is efficient. If not,provide a Pareto preferred allocation.
                                        [size=12.000000pt]a.There exists 15 frisbees and 10 pairs of cleats. Josh is allocated 15 frisbees and 10 pairsof cleats, with Martin getting nothing.
                                        [size=12.000000pt]b.There exists 15 frisbees and 10 pairs of cleats. Josh and Martin are each allocated 7frisbees and 5 pairs of cleats.
                                        [size=12.000000pt]c.Josh has 10 frisbees and 4 pairs of cleats and Martin has 5 frisbees and 6 pairs of cleats.At this point, josh’s marginal rate of substitution of frisbees (f) for cleats (c) is MRS[size=8.000000pt]J[size=8.000000pt]fc [size=12.000000pt]=[size=12.000000pt]−[size=12.000000pt]2 (Josh is indifferent between 1 more frisbee and two pairs of cleats). Martin’s marginalrate of substitution is MRS[size=8.000000pt]M[size=8.000000pt]fc [size=12.000000pt]= [size=12.000000pt]−[size=12.000000pt]1.
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[size=12.000000pt]2. Suppose the production of electricity (E) is related to capital (K) and labor (L), accordingto:
                                        [size=12.000000pt]E = min(K,L)
                                        [size=12.000000pt]In other words, electricity production equals the smaller of the two numbers K and L. Arethe following allocations efficient? If not, comp up with a Pareto preferred allocation.
                                        [size=12.000000pt]a.Firm one K=2 and L=1. Firm two has K=1 and L=2.
[size=12.000000pt]b. Firm one K=0 and L=0. Firm two has K=5 and L=5.
[size=12.000000pt]c.Firm one K=3 and L=2. Firm two has K=5 and L=5.
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