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Efficiency and Equity

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1. Suppose two passengers both end up with a reservation for the last seat on a train from San Francisco to Los Angeles. Two alternatives are proposed.
A) Toss a coin.
B) Sell the ticket to the highest bidder.
Compare the two from the standpoint of efficiency and equity.

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Solution Summary

Efficiency and equity is examined for two passengers ending up with a reservation for the last seat on a train.

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Dear Student,

Tossing a coin would be more fair and equitable. This is because the probability of success/ failure is equal for both. So in the justice point of view, tossing a coin ...

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