markets

Question 1

define pareto efficiency

Answer 1

situation where it’s importable to make someone better off without making someone else worse off
additionally: An allocation is Pareto efficient if there are no gains from trade to be made.

Question 2

define pure exchange

Answer 2

exchange where the products are the currency
basically a barter economy

Question 3

define blocked allocations

Answer 3

Starting from an original allocation W, an alternative allocation E is said to be blocked by individual x, if x is made worse off under E compared to W

basically if someone’s not happy with a trade offer they won’t take it

Question 4

define equitable allocations

Answer 4

an allocation is equitable when one individual doesn’t prefer another’s binder over their own

Question 5

define envy

Answer 5

when individual A prefers individual B’s bundle over her own