Economics · Welfare Economics
Which of the following situations satisfies Kaldor-Hicks efficiency but violates Pareto efficiency?
- 1Redistribution leaves social welfare unchanged
- 2All individuals are made better off
- 3The gain of winners exceeds the loss of losers, but losers are not compensated✓
- 4At least one individual gains and no one loses
Correct answer
The gain of winners exceeds the loss of losers, but losers are not compensated
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