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Evaluating Policy with Efficiency Criteria
A government is considering a new policy. Policy A results in an economic allocation where 90% of the population receives a benefit of $10 each, and 10% of the population incurs a cost of $5 each. Policy B results in an allocation where 10% of the population receives a benefit of $1,000 each, and 90% of the population experiences no change in their well-being. An advisor argues that since Policy B makes some people better off without making anyone worse off, it is the superior choice. Critique this advisor's conclusion. In your answer, explain why relying solely on the criterion of making 'at least one person better off without making anyone else worse off' can be an insufficient method for judging the overall desirability of an economic outcome.
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CORE Econ
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.4 Strategic interactions and social dilemmas - The Economy 2.0 Microeconomics @ CORE Econ
Ch.8 Supply and demand: Markets with many buyers and sellers - The Economy 2.0 Microeconomics @ CORE Econ
Evaluation in Bloom's Taxonomy
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