Question

explain the concept of pareto efficiency and discuss it's relevance to public policy

Answer 1

Ans-

Concept of Pareto efficiency- According to Pareto efficiency concept, resources are distributed in economical way but it does not specify fair or equal distribution of resources. In more detail, Pareto efficiency is a condition that cannot be changed or modified i.e. to make preference to any individual criteria without dissatisfying any one.

E.g. An economy that contains only one commodity which everone likes in this case to make someone better is to give more of the good,in which someone gets more goods and some gets less goods as Pareto equity does not include equal distribution of resources.

This concept is widely accepted economic standard for measuring the performance of economic results.

Public policy and Pareto efficiency - The concept of Pareto efficiency is used by many public sector organisations.In deciding public policy ,public organisations adopt this approach in managing the welfare activities where resources are more but distributed unequally to the people.It is also efficient to identify the public values in the given situation.