Q no 2: Diagrammatic ally explain pareto optimality.?
Answer:
This is very simple concept of an economist he explain the theory for social welfare goods.
In the situation must be worse off for someone better-off.
مطلب کسی ایک چیز کو بہتر کرنے کے لئے کسی ایک کو کم کرنا پڑے گا ۔
Pareto optimality have some assumptions:
1 Two Commodities, Two factor of production and Two factor of consumption.
This is 2 X 2 X 2 model.
Diagrammatical draw a box in the square shape which is called Edge worth Box. Draw the indifference curve there is show one commodity level up and one is down and draw a line in the center of indifference curve which communicate the all indifference curve equilibrium level this line is called contract curve.
Diagram of pareto optimality.
Figure 1:
For detail answer follow the below link.
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