Explore BrainMass

Explore BrainMass

    Managerial Economics: What is Pareto efficiency?

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What is Pareto efficiency? Why do economists use this criterion for comparing alternative economic systems?

    © BrainMass Inc. brainmass.com March 4, 2021, 6:39 pm ad1c9bdddf

    Solution Preview

    See attached file for further details.

    I found a typical definition of Pareto Efficiency from Wikipedia, I have summarized for you below, if you want to see the whole explanation, refer to the word document below.

    "Pareto efficiency, or Pareto optimality, is a central theory in economics with broad applications in game theory, engineering and the social sciences.

    Given a set of alternative allocations and a set of individuals, a movement from one alternative allocation to another that can make at least one individual better off, without making any other individual worse off is called a Pareto improvement or Pareto optimization. An allocation of resources is Pareto efficient or Pareto optimal when no further Pareto improvements can be made.

    Thus in a Pareto Efficient outcome, we cannot make any person better off without ...

    Solution Summary

    The 556 word solution presents a good summary of the term and how it is used. The response also provides a good resource with a fuller explanation.