Question

Pareto optimality is the condition in which A) the distribution of income is equal. B) no change is possible that will make some members of society better off without making at least one other member of society worse off. C) firms are forced to internalize the effects of all externalities. D) it is possible to make one person better off without making someone else worse off.

Answer 1

Answer: Pareto optimality is the condition in which "B) no change is possible that will make some members of society better off without making at least one other member of society worse off."

Explanation: An allocation of assets is optimal in the sense of Pareto (or Pareto efficient) when there is no possibility of redistribution in a way in which at least one person would be better, while no other individual would end up worse.