ECON 104 Lecture Notes - Lecture 3: Pareto Efficiency, Economic Surplus, Free Market
13 Aug 2016
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The less input and the same output or same input more output it is more ef cient. (productive ef ciency). Allocative ef ciency allocation= the description of who has what. A change from one allocation to another is a pareto improvement if this change makes at least 1 person better off and non-worse off. An allocation is pareto ef cient if there is no pareto improvement possible/ available. Not great 1)likely status quo: many pareto ef cient allocations (not useful). An allocation is marshall ef ciency if it maximizes aggregate value. Marshall improvement increases aggregate value. (unlike pareto improvement there are winners and losers here). Leo tolstoy (many economists use marshall ef ciency because pareto ef ciency are not very practical). This is inef cient = i can describe an improvement . If its theres no improvement available then it is ef cient. (also pay attention to who"s better or worse off).
