Economics (AS & A Level) · May / June 2022 · Paper 31 · Question 1
9708Efficiency and market failure
Which statement identifies the condition necessary to achieve Pareto optimality?
- AAll consumers maximise their utility subject to their available income.
- BIt is not possible to produce greater output with the resources available.
- CIt is not possible to reallocate resources to make someone better off without someone else becoming worse off.
- DPotential losers from any reallocation of resources cannot be compensated by those who gain.
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Correct answer: C. It is not possible to reallocate resources to make someone better off without someone else becoming worse off.
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