In: Economics
Which of the following programs would provide a Pareto improvement?
A.) a new university supported by a proportional tax paid by everyone
B.) a lung cancer treatment facility financed by cigarette taxes.
C.) A new (and badly needed) national defense system funded by any form of taxes paid by all US residents.
D.) A Federally funded water project in California.
Please provide an answer and an explanation if possible.
Answer.) B.) A lung cancer treatment facility financed by cigarette taxes.
According to neoclassical economic theory, a Pareto improvement occurs when redistribution of resources side-effect no one but still makes atleast one person better off, given intial resource allocation.