7. Which of the following statements about the outcome of an economic interaction is correct? (A) If the allocation is Pareto efficient, then you cannot make anyone better off without making someone else worse off. (B) All participants are happy with what they get if the allocation is Pareto efficient. (C) There cannot be more than one Pareto-efficient outcome. (D) Pareto-efficient outcome is always fair.

5. Four farmers are deciding whether to contribute to the maintenance of an irrigation project. For each farmer, the cost of contributing to the project is $10. But when any one farmer contributes, all four of them will benefit from an increase in their crop yields, in particular each gains additional $8. Which of the following statements is correct? (A) If all the farmers are selfish, none of them will contribute. (B) There are multiple Nash equilibria in this game. (C) If Kim is altruistic and contributes $10, the others might contribute too, even if they are selfish. (D) If the farmers have to reconsider this decision every year and consider infinite horizon of planning, they will never choose to contribute to the project if they are selfish.

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