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explain in detail the difference between the concept of Pareto optimality and Pareto superiority.
what would happen if a policy change moves an economy from a non-Pareto optimal situation to a Pareto optimal situation?
will the changes from a non-Pareto optimal situation to a Pareto optimal situation necessarily lead to a Pareto optimal situation?
Step by step
Solved in 2 steps
- If a policy change in policy causes an economy to move a non-Pareto optimal situation to a Pareto optimal situation, what does this imply. How is social welfare acheived from a non-pareto optimal situation to a Pareto optimal Situation.In common parlance, we say that economics is everywhere. CommentIn the basic supply-and-demand model, a buyer only purchases a good when? if the price is lower than it was previously. if the price of the good covers the producers’ costs of production. if the price is less than they are willing to pay. if doing so increases the well-being of society. if they are forced to do so.
- For each of the following policy changes, explain why the change is or is not likely to be a Pareto improvement.1)Replacing the system of agricultural price supports with a system of income supplements for poor families.2)increasing social security benefits, financed by an increase in the payroll tax.According to the welfare theory covered in the unit, which of the following statements is true? a. A general-equilibrium Pareto-efficient outcome will always be welfare maximising, according to the First Welfare Theorem. b. A general-equilibrium Pareto-efficient outcome will always be welfare maximising, according to the Second Welfare Theorem. c. A general-equilibrium Pareto-efficient outcome may not be welfare maximising, due to lack of equity in the distribution of the resources of an economy. d. A general-equilibrium Pareto-efficient outcome will always be welfare maximising, because all Pareto-efficient outcomes maximise welfare by definition.what is the role of government in bringing about Pareto-efficiency
- How, if any, does the invisible hand affect government resource allocation? Group of answer choices A. It rewards government bureaucrats who are most efficient at implementing public policies. B. It does not help resource allocation, as there are no competitive forces within government that automatically direct resources to their best. C. It enhances govenment efficiency by promoting competition for resources within government. D. It reduces government efficiency by sending market signals that interfere with government decision making.Which of the below statements DOES NOT capture Economics? Group of answer choices Economics tells us that there is no theoretical limit to how well we can live or how widely our wealth can spread. The economic prosperity of an economy requires that every person in that economy have a Ph.D. degree. Wheelan argues that the free market system does not make poverty inevitable. Economic development is not a zero-sum game. Even the most prosperous economy will contiue to require certain manual tasks that do not require advanced college degrees. These tasks cannot be replaced with automation. Expecting Ph.D.s or people with professional education to do such tasks will have a high opportunity cost.A society must decide whether to produce more military goods or more consumer goods. This choice is referred to as "guns or butter." Which of the following is not an example of "guns or butter"? The U.S. federal government cuts education funding in order to reallocate the funds to the military. Australia distributes government funds to its military and social programs equally. Denmark stays out of military conflicts in order to provide for its people rather than its army. Germany's federal government gives additional funding to health care while reducing its military spending.
- Explain equilibrium in economics?Answer the questions based on the model given in the image: a. What is the set of Pareto optimal outcomes in this economy? Justify your answer. b. What is the competitive equilibrium in this economy assuming price of good 1 is set to 1. Specify whether the competitive equilibrium is pareto optimal. c. Now consider another economy where everything is as before, apart from individual 2’s preferences, which are as follows: among any two any bundles consisting of X and Y, individual 2 prefers the bundle which has a larger amount of commodity X irrespectiveof the amount of commodity Y in the two bundles, and between any two bundles with the same amount of X, she prefers the one with a larger amount of Y. (not sure but these are perhaps lexicographic preferences) Find the set of Pareto optimal outcomes in this economy.“Generally, an economy will tend to be relatively effective at producing goods that are intensive in the factors with which the country is relatively well endowed.” Explain the above statement with the help of a graph.
