Question

Determine which of the following statements are true and which are false and why?

(a) There always exist a Pareto efficient alternative.

b) There always exist a Pareto dominated alternative.

(c) The best alternative according to Rawlsian Justice is always Pareto efficient.

(d) The best alternative according to Borda rule is always Pareto efficient.

Answer 1

Answer : a) False . Pareto efficient or Pareto optimal condition occurs when resources are optimally allocated. This means redistribution is not possible here. Therefore, in case of alternative allocation, the allocation is not Pareto efficient.

b) True . Pareto dominated are two types : (i) weakly dominated where everyone has better off; (ii) strongly dominated where some people has better off but no one has worse off.

c) True . Rawls justice is known as justice of fairness. This means everyone has equal advantage and equal distribution. In this case everyone has better off without making anybody worse off. Therefore, Rawlsian justice is Pareto efficient.

d) False. Let there are 3 parties for election: I, II & III and 3 supporting groups : A, B & C.

According to Borda rule the preferences becomes :

I : A > B > C

II : B > C > A

III : C > A > B

Now let party I assures group A to fulfil all demands after winning and then to group B and group C who will get less advantages than group A. Similarly party II assures group B and party III assures group C. Now if the winner is Party II then all advantages will go to group B where groups A and C will get less advantages. Here group B has better off and others has worse off which is not the criterion of Pareto efficient.