Harvard edx Contract Law FULL  University of Pennsylvania MGMT 918

Unit 1
Deadweight Loss Problem 1
2/2 points (graded)
Vera and Vladimir live in the Arctic. Vera is an expert ice fisher, and Vladimir is an
excellent hunter. Neither is any good at the other activity – Vera is a terrible hunter, and
Vladimir is awful at fishing.
Vera can only ice fish in the winter, but she can freeze what she catches to eat during
the summer. Vladimir can only hunt in the summer, but he can’t freeze what he kills.
It’s winter, and all of the meat that Vladimir killed during the summer has been eaten or
has spoiled. He’s hungry. He sees that Vera is still slowly but surely catching fish, and
that she isn’t eating all of them – she’s freezing the extras. He asks her if he can have
some of her extra fish, but she says no, because she needs to freeze them so she’ll
have something to eat in the summer, when she can’t fish. As a result, Vladimir doesn’t
have anything to eat.
What is the deadweight loss in this situation?
Vera is freezing her extra fish.
Vladimir has nothing to eat in the winter. correct
Vera won't have anything to eat in the summer.
Vladimir will be unable to eat all of the meat he catches.
Answer
Correct:
You are correct. The food is inefficiently allocated between Vladimir and Vera, so
Vladimir does not have anything to eat during the winter