In a pure exchange economy, if an allocation is Pareto efficient, it is impossible to have two people who prefer each other's consumption bundles to their own.

Question

Quizplus · Accepted Answer

Pareto efficiency means that no one can be made better off without making someone else worse off. Therefore, if two people prefer each other's consumption bundles, then there is an opportunity for a Pareto improvement, which would mean that the original allocation was not Pareto efficient.

In a Pure Exchange Economy, If an Allocation Is Pareto