Question

If an allocation of commodities is Pareto efficient, what does this mean? a. To make one...

If an allocation of commodities is Pareto efficient, what does this mean?

a. To make one individual better off, another individual must be made worse off.

b. It is not possible to make anyone better off.

c. The allocation is socially desirable.

d. The allocation is optimal for at least one of the consumers

Homework Answers

Answer #1

If an allocation of commodities is Pareto efficient, what does this mean?

a. To make one individual better off, another individual must be made worse off.

Explanation - Pareto efficiency is a condition whereby resources are allocated in such a way that to make an individual better off, it must make another individual worse off. It is a state where no further economic changes can be made to make anyone better off. In such a scenario, resources are allocated at maximum allocation level.

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