Imagine a distribution in our model that is Pareto optimal (or efficient) in both consumption and...

Imagine a distribution in our model that is Pareto optimal (or efficient) in both consumption and production. Why is this distribution not necessarily Pareto optimal in general?

Expert Solution

Rahul Sunny answered 2 years ago

1e. What is a Pareto dominated outcome & compare it with a Pareto optimal/efficient outcome?

Within the framework of the single period investment-consumption model, explain the optimal consumption/investment decision both with...

Within the framework of the single period investment-consumption model, explain the optimal consumption/investment decision both with and without capital markets.

Although a competitive equilibrium is always Pareto efficient, a Pareto efficient outcome is not necessarily a...

Although a competitive equilibrium is always Pareto efficient, a Pareto efficient outcome is not necessarily a competitive equilibrium.1 Explain. (It is sufficient to give an example of a Pareto efficient outcome that is not a competitive equilibrium and explain why it is not.) (A competitive equilibrium requires that consumer utility-maximize, firms profit-maximize, and Supply equals Demand (markets clear) under the assumptions that firms and consumers are price-takers, firms are owned by consumers, all goods are private goods, and there is...

What does it mean when a market fails? If a situation is Pareto-efficient, are Pareto improvements...

What does it mean when a market fails? If a situation is Pareto-efficient, are Pareto improvements possible? Does a Pareto improvement necessarily pass the cost-benefit test? Is the converse true? Explain

In our discussion of efficient portfolios, we saw the we can directly find the optimal portfolio...

In our discussion of efficient portfolios, we saw the we can directly find the optimal portfolio of risky assets (at least for an investor whose entire preference is defined by mean and variance) by maximizing the so-called Sharpe ratio. Explain why this optimization procedure works – that is, why is a maximum Sharpe ratio considered optimal. (Hints: Think about what a combination of the risk-free asset and any risky portfolio selected from the efficient frontier would look like. In other...

What is meant by the claim that a competitive market equilibrium is Pareto efficient?

why is it important that a competitive market is Pareto efficient? and what does the first...

why is it important that a competitive market is Pareto efficient? and what does the first fundamental theorem of welfare economics tell us about market fail?

A member of the Pareto family of distributions (often used in economics to model income distributions) has a distribution function given by

A member of the Pareto family of distributions (often used in economics to model income distributions) has a distribution function given byMath output errorF ( y ) = \left\{ \begin{array} { l l } { 0 , } & { y < \beta } \\ { 1 - \left( \frac { \beta } { y } \right) ^ { \alpha } , } & { y \geq \beta } \end{array} \right.F(y)={0,1−(yβ)α,y 0α,β>0. Find the density function.

8. When some goods are public A. The market outcome is Pareto optimal B. The market...

8. When some goods are public A. The market outcome is Pareto optimal B. The market outcome is not Pareto optimal because too much of the public good is supplied. C. The market is not Pareto optimal because too little of the public good is supplied due to the free-rider problem. D. The market outcome is not Pareto optimal because government spending is distortionary.

Is every Nash equilibrium of a normal form game Pareto optimal? If yes, provide a proof....

Is every Nash equilibrium of a normal form game Pareto optimal? If yes, provide a proof. Otherwise, provide a counterexample.

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