Answer to Question #195559 in Microeconomics for Narendra

Question

Your task is to evaluate the impact of a new policy or a policy change on the British society from the welfare economics perspective in an essay. You can choose a policy to evaluate yourself. It needs to be a policy that has not been implemented yet. Alternatively, you can evaluate the impact of the UK re-joining the EU.

1. Evaluate the status quo versus the new policy according to the weak and strong Pareto criteria

Answer 1

When it is difficult to make one group better off without making another worse off, Pareto efficiency is said to occur. When at least one person improves without anyone else deteriorating, this is known as a Pareto change. The importance of Pareto efficiency is that it offers a shaky but generally accepted criterion for comparing economic outcomes.Economic efficiency has been important factor to economist. Pareto optimality (PO) has been key to economic efficiency. Its serve the following main roles apart from transfer of disciplinary power inherent to both roles.

(1)its govern the relationship of economic states by ensuring no rival goods.

(2)its involves extension to compensation test because its non discriminatory.