If all opportunities for Pareto improvements have been exhausted,
A)economic efficiency has been achieved
B)the allocation of goods and services is fair
C)perfect competition has been achieved
D)the economy is in disequilibrium
E)economic inefficiency has been achieved

Question

Quizplus · Accepted Answer

A Pareto improvement occurs when at least one person can be made better off without making someone else worse off. If all opportunities for Pareto improvements have been exhausted, it means that any further changes would necessarily make someone worse off. Therefore, the current allocation of goods and services is economically efficient, meaning that resources are being allocated in a way that maximizes social welfare, given the available technology and resources.

If All Opportunities for Pareto Improvements Have Been Exhausted