True or false and explain why 1) Pareto-efficient allocations are always desirab

Question

True or false and explain why 1) Pareto-efficient allocations are always desirable because they maximize surplus.

2) market failures necessitate government intervention.
3) A non- excludable good will necessarily have issues of both overconsumption and underproduction . True or false and explain why 1) Pareto-efficient allocations are always desirable because they maximize surplus.

2) market failures necessitate government intervention.
3) A non- excludable good will necessarily have issues of both overconsumption and underproduction . 1) Pareto-efficient allocations are always desirable because they maximize surplus.

2) market failures necessitate government intervention.
3) A non- excludable good will necessarily have issues of both overconsumption and underproduction .

Explanation / Answer

1.

The statement is false. Pareto-efficient allocation is a system of resource allocation in which one can be benefited if other loses. This is not the socially desirable distribution system. Therefore, the question of surplus does not arise.

2.

The statement is true. If goods and services are not properly allocated to people then this is the market failure. Government intervention is necessary for ensuring better allocation.

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