though they will achieve the largest social benefits—a combined benefit of 12 for the two countries—if they

both choose to protect. Environmental treaties can be viewed as a way for countries to try to extricate

themselves from this situation.

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13. a.

555

b. Of the choices provided, P, R, and S demonstrate productive efficiency. These are the choices on the

production possibility frontier.

c. Allocative efficiency is determined by the preferences—in this case by the preferences of society as

expressed through government and other social institutions. Because you do not have information

about these preferences, you really cannot say much about allocative efficiency.

d.

In the choice between T and R, R should clearly be preferred, because it has both more corn and more

trees. This answer illustrates why productive efficiency is beneficial. Compared with choices inside

the PPF, it means more of one or both goods.

e.
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