During World War Two, prisoners of war
received Red Cross parcels containing jam, tea,
chocolate, raisins, and other items. Each prisoner in a
camp received an identical parcel. After distribution,
considerable trading took place. In terms of economic
efficiency, the original distribution created a situation
efficient because it was completely
inefficient because preferences
efficient because anytime anyone gains
in a trade, someone else must lose.
inefficient because the prisoners did
not produce anything.