Question:
An allocation for agents in an economy, x, is said to be Pareto superior to another allocation y if moving from allocation y to allocation x:
An allocation for agents in an economy, x, is said to be Pareto superior to another allocation y if moving from allocation y to allocation x:
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Recall what Pareto superior means.
Updated On: Dec 21, 2024
- Increases some people's welfare while reducing others' welfare
- Increases all agents' welfare
- Increases no agents' welfare
- Creates a fiscal deficit
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The Correct Option is B
Solution and Explanation
An allocation is Pareto superior if it results in an improvement in at least one individual's welfare without reducing the welfare of anyone else. This is an essential concept in welfare economics. Hence, the correct answer is (b).
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