Technically Feasible Allocations

5.5 of The Economy 1.0 & The Economy #3

Bruno has an ‘accessory’, which means that Angela, our beloved farmer, is in a worse spot than someone who is the responder in the dictator game. Why?

-Bruno can both determine the size of the pie, and the division of the pie. Incredible

What does technically feasible infer?

-Allocations that are within the limits set by technology and biology.

-Determined by the production function

What does biologically feasible infer?

-Allocations that are capable of sustaining the survival of those involved.

-Determined by one’s biological survival constraint

Decipher this graph

-Angela’s and Bruno’s combined FF still is at play, but the biological survival constraint adds a new twist.

-Workers need energy to work. As Angela works more, she needs more energy, which we assume comes from grain. If she consumes less than the constraint, she dies.

-Point Z represents a point such that if Angela did 0 hours of work, she still needs 2.5 bushels of grain to live.

From this graph, what can actually kill her?

-What area will Bruno be having a look at?

-Angela can pass away from the limited productivity she characterises, and how much Bruno takes from her.

-Remember, when it was just Angela, this wasn’t a problem - the feasible frontier is significantly higher than the biological constraint. It is only because of Bruno this is being questioned

-Therefore, Bruno will look at the technically feasible set in deciding where to place the allocation, and so will Angela. Where it ends up depends entirely on the distribution of power