Suponha que o consumidor I tenha a função de utilidade U(x,y) = x + 2y e o Consumidor II tenha a função de utilidade U(x,y) = min{x,2y}. O Consumidor I tem inicialmente 12 unidades de y e zero unidades de x, enquanto o Consumidor II tem 12 unidades de x e zero unidades de y. É correto afirmar que, no equilíbrio competitivo:

Item 2 - a restrição orçamentária do Consumidor II será: x_s + 2y_s = 24.

Indeed, accelerated resource degradation in DRAs is mainly the cumulative consequence of developed country policies that have led to (1) a tripling of world real interest rates between 1945-1974 and 1979-1993, and in the longer term, (2) falling and unstable relative farm prices, and (3) labor-displacing technical progress. In this chapter I set out reasons for believing that these international effects have been paramount.

In its analysis of the causes of natural resource degradation in DRAs, the text

Item 2 - includes the historically declining relative farm prices in the world markets as one of the reasons for the degradation;

Exogenous World Farm Prices

The level of world farm prices also affects the scale and level of impact from developing country domestic policy upon resource degradation or renewal in DRAs. With marked fluctuations, world prices for most main crops have been falling in real terms for 40 years. Farmers anticipating continued price declines will shift toward adding value by farm production now at the cost of production later. Accelerated resource degradation results. This price-induced shift toward resource degradation is attributable to exogenous factors.

In its analysis of the impact of world farm prices upon degradation of resources in DRAs, the text states that:

Item 4 -expectation of lower prices in the future induces greater levels of production in the present.