(a) Which outcomes are Pareto Efficient? Which are not? Explain your reasoning. (b) As an economist, which of the Pareto Efficient outcomes is the most desirable? Explain. (c) As an economist, would you choose one of the outcomes that is not Pareto Efficient? Explain.

(a) Which outcomes are Pareto Efficient? Which are not? Explain your reasoning. (b) As an economist, which of the Pareto Efficient outcomes is the most desirable? Explain. (c) As an economist, would you choose one of the outcomes that is not Pareto Efficient? Explain.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.16P

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Question

125
Outcome
A
B
C D
E
Utility of Individual #1
2
13 15 13
3 14
4 14 5
Utility of Individual #2 6 13 12 18
Utility of Individual #3 | 24 11 3 5 17 12 18 5
You like all these individuals, although not necessarily equally.
F G H
4 12
15
(a) Which outcomes are Pareto Efficient? Which are not? Explain your
reasoning.
(b) As an economist, which of the Pareto Efficient outcomes is the most
desirable? Explain.
(c) As an economist, would you choose one of the outcomes that is not
Pareto Efficient? Explain.
(d) Suppose the “world” is initially at an allocation that is not Pareto
Efficient. Will all of the Pareto Efficient outcomes identified in part
(a) be a Pareto Improvement? Explain.

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