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16 17 18 19 20 21 22 23 24 25 26DfA DfE DfA+E Sf $ Quantity of Pizza 48 Pareto Efficiency – Private Goods Case ? MRSfa = Pf/Pa ? Set Pa = $1 ? MRSfa = Pf ? DfA shows MRSfa for Adam ? DfE shows MRSfa for Eve ? Sf shows MRTfa ? Necessary condition for Pareto efficiency: MRSfaAdam = MRSfaEve = MRTfa 49 Efficient Provision of Public Goods Units of Fireworks 1 2 3 4 Adam (DrA) $300 $250 $200 $150 Eve (DfE) 250 200 150 100 Market (DfA+E) $550 $450 $350 $250 410 0501001502002503003504004505005506006507007508001 2 3 4DrA DrE DrA+E Sr Quantity of Fireworks $ 411 Pareto Efficiency – Public Goods Case ? MRSfa = Pf/Pa ? Set Pa = $1 ? MRSfa = Pf ? DfA shows MRSfa for Adam ? DfE shows MRSfa for Eve ? Sf shows MRTfa