Skip to content
We use only essential cookies to keep you signed in and remember your preferences. See our Cookie Policy.
TestStop
MocksPracticeResourcesIndiaBlogPricing
Sign in
Questions › DSE › DSE 2012 › Q2
1 markMicroeconomics › Welfare economics and social choice › Pareto efficiency and Pareto improvementsModerateabout 2 min

DSE 2012 Question 2: Welfare economics and social choice

Consider a two-person two-good exchange economy, where agents are denoted by A,BA,BA,B and goods are denoted by X,YX,YX,Y. A Pareto optimal allocation of this economy may not remain Pareto optimal if

Tap an option to check your answer.

Answer and worked solution

Checking your account…

Plain-text version

Consider a two-person two-good exchange economy, where agents are denoted by A,B and goods are denoted by X,Y. A Pareto optimal allocation of this economy may not remain Pareto optimal if (A) Everything else remaining the same, Agent A transfers a part of her endowment to Agent B (B) Everything else remaining the same, Agent A gets additional endowment (C) Everything else remaining the same, Agent A 's utility function is monotonically transformed (D) All of the above

Welfare economics and social choice has come up 62 times in 6 exams since 2004.

What this question tests

This question is on Pareto efficiency and Pareto improvements, part of Welfare economics and social choice in Microeconomics.

What it means for an allocation to be efficient, checked in exchange economies and other settings.

TestStop has 40 past-paper questions on this subtopic.

Practise Welfare economics and social choiceMore on Pareto efficiency and Pareto improvements

Similar questions from other papers

  • CUET-PG 2026 · Q64Match the LIST-I with LIST-II. List I A. Contract Curve B. Utility Possibility Frontier C. Social Welfare Function D. Production Possibility Frontier. List II I. Shows…
  • IIT JAM 2026 · Q15Consider a social welfare function (SWF) defined as SWF=f(U₁,U₂,…,Uₘ), where Uᵢ is the utility of the i^(th) person and there are m people. Identify which one of the…
  • CUET-PG 2025 · Q2The Pareto optimality criterion implies fulfillment of all the following conditions except
  • UGC-NET 2025 · Q30Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): When everyone trades in the competitive market…
  • UGC-NET 2025 · Q52Which of the following statements correctly describe the concept of efficiency in environmental economics? A. An allocation is Pareto efficient if no one can be made…

Question from the DSE 2012 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.