Jamil owns ten pairs of football boots while Saleem has none. The production cost for one pair of boots is Rs 50. Jamil values an extra pair at Rs 100, whereas Saleem values a pair at Rs 40. According to efficiency principles, who should be allocated an additional pair of boots?

Show Answers

For efficiency, Saleem should be given the bootsFor efficiency, Jamil should be given the bootsFor fairness, Jamil should receive the bootsConsidering consumer surplus, both should get a pairNone of the above

Explanation

From an efficiency standpoint, the boots should go to the person who values them more than the cost of production. Since Jamil values an extra pair at Rs 100, which exceeds the production cost of Rs 50, whereas Saleem values them at Rs 40, efficiency dictates that Jamil should receive the boots.