Consider a simple economy with two individuals (A and B) and two goods (x and y). Can you please Write down the Pareto efficient conditions for this economy and explain the first fundamental theorem of welfare economics?
Consider a simple economy with two individuals (A and B) and two goods (x and y).
Can you please Write down the Pareto efficient conditions for this economy and explain the
first fundamental theorem of welfare economics?
Pareto Efficiency: - it is related to the optimal distribution of resources, it states that Pareto efficient condition of resource allocation is that condition where it is impossible to make someone better off without making someone else worse off.
In our question we have two individuals (A and B) and two goods (x and y) so, the Pareto efficient allocation of good X and good Y between A and B will be at that point where it would be impossible to make either A or B better off without making other worse off.
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