Select the statements that are true in the complete contracts case: Select one o

Question

Select the statements that are true in the complete contracts case: Select one or more: a. This interaction will result in a Pareto efficient outcome. b. Some people will be credit constrained: they would like to invest in the project, but cannot obtain the necessary credit. c. The level of speed chosen will be the same as in the owner-operator case. d. An makes just as much as he did when he was the owner-operator. e. Since it is a complete contract, Pei can restrict An to his Participation constraint.

Explanation / Answer

Solution: This interaction will result in Pareto efficient outcome

Explanation: Pareto efficient outcome is final optimum solution beyond which any change would result to loss in the resource allocation, therefore a complete solution in itself.

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