Difference between revisions of "Efficiency vs. Equity"
From Diversifying Economic Quality: A Wiki for Instructors and Departments
(→Pareto Efficiency) |
|||
Line 8: | Line 8: | ||
Allocation so that no one can be made better off | Allocation so that no one can be made better off | ||
− | + | [[File:paretoefficiency.gif]] | |
Microeconomic Definition of Maximization of Utility via Minimization of Cost | Microeconomic Definition of Maximization of Utility via Minimization of Cost | ||
− | |||
== failure to account for equity == | == failure to account for equity == |
Revision as of 12:32, 31 May 2011
Economic Efficiency
Pareto Efficiency
Vilfredo Pareto
Allocation so that no one can be made better off
Microeconomic Definition of Maximization of Utility via Minimization of Cost
failure to account for equity
"what if"...society can derive utility from equity...(MBequity>MCequity => Efficiency = Equity)
conflict of incentives, because someone can be made better off, they have an incentive to not support equity
cost effects of attempting (Effect on PPF, inhibit econ growth...$ could be used on capital)
counterarg...$ used for equity has a higher effect on economic growth, spending chain, human capital