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Comparing Economic Policies
Consider two economic policies, Policy X and Policy Y. Under Policy X, Person A receives a benefit of $100 and Person B receives a benefit of $50. Under Policy Y, Person A receives a benefit of $80 and Person B receives a benefit of $70. Using the principle that one outcome is an improvement over another only if it makes at least one person better off without making anyone worse off, explain why neither policy can be judged as an improvement over the other.
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A proposed city project will build a new public park. This project increases the property values and well-being for 1,000 residents. However, to build the park, one resident's home must be acquired by the city, and while they are compensated, they consider themselves slightly worse off because they have to move. According to the principle that an outcome is an improvement only if at least one person is better off and no one is worse off, this project is considered an improvement.