Answer to Question #123355 in Microeconomics for Yolanda Nkala

Question

Using the Pareto criterion for social welfare improvements, as well as the strength and weaknesses of the criteria, critically discuss the following scenario. Consider a family of two people who own a goat. The goat has no economic uses (e.g. it does not provide milk for the family and it cannot be sold). Consider this to be the status quo and that the goat can either be kept alive or slaughtered and eaten. Assume that the family members are both meat eaters. Would a decision to slaughter and eat the goat be social welfare enhancing? Would this decision change if one of the family members is a vegetarian who does not eat meat for altruistic reasons while other family member is a meat eater?

Answer 1

Yes, a decision to slaughter and eat the goat will be social welfare enhancing because in this case both of them are meat eaters hence both of them are made better off because they will all eat the meat.

Yes, the decision will change because in this case one of the family member will take meat, making the member better off and the vegetarian will not be able to eat meat making the member worse off.