Pareto efficiency occurs when there is no difference in the levels of income among individuals.

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Pareto efficiency refers to a situation where it is impossible to make any individual better off without making someone else worse off. It does not necessarily mean that there is no difference in the levels of income among individuals. In fact, Pareto efficiency can occur even in a highly unequal society if the distribution of income is such that any attempt to redistribute it would make someone worse off without making anyone else better off.

Pareto Efficiency Occurs When There Is No Difference in the Levels