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Outline for Friday, August 8 Remember Quiz Monday Final Friday – don’t yet know where Review Thursday Quiz practice Other pricing schemes General Equilibrium
Pareto Efficiency A change is a Pareto improvement or is Pareto- superior if… Is anyone better off? YES Is anyone worse off? NO A situation is Pareto efficient if no Pareto improvement exists It is inefficient if an improvement can be made
Pareto Efficiency for market interventions A Pareto improvement has CS>0 for some consumer or PS>0 for some firm or G>0 And CS0 for all consumers, PS0 for all firms, and G0 A welfare improvement has W = CS + PS + G > 0
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aug8

  • 1. Outline for Friday, August 8 Remember Quiz Monday Final Friday – don’t yet know where Review Thursday Quiz practice Other pricing schemes General Equilibrium
  • 2. Pareto Efficiency A change is a Pareto improvement or is Pareto- superior if… Is anyone better off? YES Is anyone worse off? NO A situation is Pareto efficient if no Pareto improvement exists It is inefficient if an improvement can be made
  • 3. Pareto Efficiency for market interventions A Pareto improvement has CS>0 for some consumer or PS>0 for some firm or G>0 And CS0 for all consumers, PS0 for all firms, and G0 A welfare improvement has W = CS + PS + G > 0