Instead of throwing away a worn-out pair of jeans,a cowboy trades them in for $12.The jeans are resold for $45 to someone who likes to project a rugged image.These transactions are Pareto improvements.

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This is a Pareto improvement because both parties benefited from the transaction. The cowboy no longer had a pair of worn-out jeans and gained $12, while the buyer got a pair of jeans that they liked for $45. No one was worse off as a result of this transaction.

Instead of Throwing Away a Worn-Out Pair of Jeans,a Cowboy