Consider three ways of helping poor people to buy food, clothing, and shelter. The first way is to pass laws setting price ceilings to keep these basic goods affordable. The second is to have the government distribute coupons that give poor people a discount when they buy these necessities.  The third is for the government to distribute income to poor people. Explain which programme is more likely to have a Pareto-efficient outcome, and explain why the other programmes are less likely to be Pareto-efficient.

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
ChapterST4: Keynes And Hayek: Contrasting Views On Sound Economics And The Role Of Government
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Consider three ways of helping poor people to buy food, clothing, and shelter.

The first way is to pass laws setting price ceilings to keep these basic goods affordable.

The second is to have the government distribute coupons that give poor people a discount when they buy these necessities.

 The third is for the government to distribute income to poor people. Explain which programme is more likely to have a Pareto-efficient outcome, and explain why the other programmes are less likely to be Pareto-efficient.

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