Prosperity & Power Flashcards
1
Q
What is the definition of an allocation?
A
An allocation is the outcome of an economic interaction (describes who does what and who gets what)
2
Q
What makes an allocation pareto efficient?
A
An allocation is pareto efficient if nobody can be made better off without making someone worse off.
3
Q
What are the 2 reasons an allocation would be considered unfair?
A
- Inequality of final outcome (e.g. wealth) i.e. a substantive judgement about fairness
- How the allocation came about i.e. a procedural judgement of fairness
4
Q
What does a combined feasible set show?
A
A combined feasible set shows all possible allocations of production between two parties.
