Re: Jnu questions

Posted by MI on Apr 29, 2013; 2:09pm
URL: http://discussion-forum.276.s1.nabble.com/Jnu-questions-tp7580219p7580230.html

Hey Kavya,

I think alternative y is pareto optimal.

I approached the question following way:

Let X be pareto optimal, in this case R1, R4 and R7 are getting the most preferred bundles. Rest are worse off as they are getting the least preferred one.

Now ask the question is there any way to make any of R -2,3,5,6 better off without making R- 1,4,7 worse off.

And answer is yes.... choosing Alternative Y  makes R-2,5 better off and R-1,4,7 are indifferent.

So clearly X is not the pareto-optimal allocation.

To Check whether Y is pareto optimal or not we try giving Alternatives Z and W to these people. We can make R-3,6 better off at the cost of making people R-1,2,4,5,7 worse off  by shifting to W or Z.

So Y is pareto optimal.

Similarly, Z and W are also pareto optimal.