Question

1. A Pareto efficient allocation of resources occurs where:

a. no individual can be made better off without making another worse off.

b. there is justice in the distribution of income and wealth MSB>MSC

c. MSB>MSC

d. all of the above

2. A public good is:

a) Any good traded in markets

b) A good that is non-excludable and non-rival in consumption

c) A good provided only to those who pay for it

d) Rarely provided by the government

Answer 1

1.Solution:-Option D is correct

D.all of the above

Expalaination:-A Pareto efficient allocation of resources occurs where no individual can be made better off without making another worse off.There is justice in the distribution of income and wealth MSB>MSC.Pareto's efficiency is defined as the economic situation when the circumstances of one individual cannot be made better without making the situation worse for another individual. Pareto's efficiency takes place when the resources are most optimally used. Pareto's efficiency was theorized by the Italian economist and engineer Vilfredo Pareto.That combination of inputs, outputs and distribution of inputs, outputs such that any change in the economy can make someone better off (as measured by indifference curve map) only by making someone worse off (pareto efficiency)

2.Solution:-Option B is correct.

B.A good that is non-excludable and non-rival in consumption

Explaination:-A good that is non-excludable and non-rival in consumption is a public good.In economics, a public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others. Public goods that are available everywhere are sometimes referred to as globalpublic goods.