When a fixed stock of consumption goods cannot be reallocated among consumers in an economy without making at least some consumers worse off, the allocation satisfies:
A)exchange efficiency.
B)input efficiency.
C)substitution efficiency.
D)Walras' Law.

Question

Quizplus · Accepted Answer

Exchange efficiency, also known as Pareto efficiency in the context of allocation, means that resources are allocated in such a way that it is impossible to make any one individual better off without making at least one individual worse off. This concept applies directly to the scenario described, where a fixed stock of consumption goods cannot be reallocated to improve someone's situation without harming another's, indicating that the allocation is already efficient in terms of exchanges among consumers.

When a Fixed Stock of Consumption Goods Cannot Be Reallocated