________ avoids interpersonal comparisons, since it requires only that an action make at least one person better off and no one worse off, evaluated in terms of the preferences of each person.
A) The Calabresi and Melamed principle
B) The Pareto criterion
C) Self-confirming equilibrium
D) Tragedy of the commons

Question

Quizplus · Accepted Answer

The Pareto criterion is a principle in welfare economics that emphasizes the importance of efficiency and avoiding interpersonal comparisons. The criterion states that an action is optimal if it makes at least one person better off and no one worse off. It evaluates outcomes solely in terms of the preferences of individual people, rather than comparing the preferences of one person to another. This makes it a useful principle for addressing issues related to public policy and social welfare.

________ Avoids Interpersonal Comparisons, Since It Requires Only That an Action