What does line segment qb represent?

A)Possible improvements for actor A that do not affect the welfare of B
B)Possible improvements for actor B that do not affect the welfare of A
C)The set of all possible improvements for actors A and B
D)The zone of potential losses for both actors

Question

What does line segment qb represent?

A)Possible improvements for actor A that do not affect the welfare of B 
B)Possible improvements for actor B that do not affect the welfare of A 
C)The set of all possible improvements for actors A and B 
D)The zone of potential losses for both actors

Quizplus · Accepted Answer

Line segment QB represents possible improvements for actor B that do not affect the welfare of actor A. This is because in Coase's theorem, the line segment connecting points Q and B represents the Pareto-optimal outcomes where one party can improve its welfare without affecting the welfare of the other party. In this case, point Q represents the current situation where actor A has resources that actor B wants, and point B represents the situation where actor B has the resources and actor A wants them. Therefore, line segment QB represents the possible improvements for actor B that do not affect the welfare of actor A.

What Does Line Segment Qb Represent