A race of timid elves passes the time by sneaking out at night, locating machinery that is in — disrepair and fixing while people are sleeping human beneficiaries this largesse
General StudiesGeneralWorked Solution
A race of timid elves passes the time by sneaking out at night, locating machinery that is in disrepair, and fixing it while people are sleeping. The human beneficiaries of this largesse are, of course, surprised and delighted when they discover the elves' handiwork the following morning. True or False: If the elves were to start charging for their services, humans would certainly be made worse off.
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SOLUTION
False, or at least not necessarily true. Although the elves want to be as helpful as possible, they have no way of knowing where their services are most valuable. As a result, they might end up spending a lot of time repairing old black and white television sets when they could be repairing the space shuttle. If humans are able to bid against each other for the elves' services, the elves will be able to concentrate their efforts where they do the most good. This makes humans better off; on the other hand, the actual payments to the elves make them worse off. The net effect on humans could go either way.