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Pareto Efficiency
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This is about the pareto efficiency coined by Vilfredo Pareto. This will help you to identify the basics of pareto optimality with graphical representation
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Pareto efficiencyPareto efficiency can be sometimes called as pareto optimality.
It is proposed by Vilfredo Pareto
The thing is that pareto efficiency is occurred when someone else is made better off
without making others worse off. it literally means that you have to gain something in
order by losing someone else's opportunity.
Pareto efficiency is based on the Pareto principle, which states that for a given set
of resources, a distribution is considered Pareto efficient if there is no way to
reallocate those resources to make one individual or group better off without making
someone else worse off.
In neo-classical economics, a Pareto efficient outcome is an action that harms no
one and helps at least one person.
A situation is Pareto efficient if the only way to make one person better off is to
make another person worse off.
The production possibility curve can be used to illustrate the concept of Pareto
efficiency and Pareto improvements in welfare.
When an economy is operating on a production possibility frontier, it is not possible
to increase output of goods without reducing output of services.
When an economy lies well within the PPF boundary, there is an inefficient use of
resources or under-utilization of resources
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