#96 PARETO OPTIMALITY | PARETO EFFICIENCY CRITERION | परेटो |WELFARE ECONOMICS | EKM |

PARETO OPTIMALITY | PARETO EFFICIENCY CRITERION | परेटो |WELFARE ECONOMICS | EKM |
Pareto optimality is a standard which describes a situation where no further improvements to society's well being can be made through a reallocation of resources that makes at least one person better off without making someone else worse off.
Assumptions-
1)For the sake of simplicity, our model here would be a 2 x 2 x 2 model ie two consumers, two goods and two inputs.
2)Ordinal measurementof utility.
3)Rational consumers and producers.
4)No value- judgements and interpersonal comparisons
5) Perfect compitition in both product and factory market.
6) Perfect mobility and divisibility of factors.
7) Independent utility functions of individuals.
8)The technique of production and substitutability of factors are given and constant.
CONDITIONS OF PARETO OPTIMALITY
👉MARGINAL OR NECESSARY CONDITIONS
Pareto says that competition leads the society to an optimum position but he did not give any mathematical proof of it. later on Lerner and Hicks derived the marginal conditions which must be fulfilled for the attainment of Pareto optimality.
1) Efficiency in exchange
2)Efficiency in production
3) Efficiency in product mix
4)Optimum degree of specialization
5)Optimum factor product relationship
6)The optimum allocation of a factor's time
7)Inter-temporal optimum allocation of money assets
👉SECOND ORDER or SUFFICIENT CONDITIONS
Such conditions require that all the Indifference and Isoquant curves should be convex to the origin (signifying diminishing MRS) and all the transformation curves should be concave to the origin (signify .
👉TOTAL CONDITIONS
These conditions are the true sufficient conditions. According to REDER the total conditions are that "if welfare is to maximum, it must be impossible to increase welfare by producing product not otherwise produced or by using a factor's not otherwise used."
Note: Stay tuned for next videos.
CONCLUSION -
Despite criticism this theory is significant as it eliminates the non- alternatives and hence, reduces the range within which socially best alternative should be explored.
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[@economicswithkusummaheshwa926]

Welcome to EKM. Like, Share & Subscribe if you find the video useful. Visit the Playlist of Welfare Economics - kzbin.info/aero/PLjt55JiIvNH0-CMN0o779KC6WB7QtkbJh&si=ycIyhrplpOajNfek Note- Visit the DESCRIPTION for written notes. Complete Playlist for WELFARE ECONOMICS FOR INDIFFERENCE CURVE kzbin.info/aero/PLjt55JiIvNH03WL8Us5fH0oRJA6BYwT1R FOR ISOQUANTS kzbin.info/www/bejne/emTUfmuChJqZaJo VALUE JUDGEMENT kzbin.info/www/bejne/iniyomtpptCbY9Usi=XWIxCWPdwADRhP_J

[@zahidaparween9073]

Thank you ma'am

[@TUHINKUMARDAS_]

The best ever..Who has made the Economics simpler..down-to-earth.. Always made Economics easier in that elegant way..Thank You.

[@economicswithkusummaheshwa926]

Thank you Mr. Das for your kind words. it means a lot to me:) Keep supporting!

[@Maths4u69]

Mam great expanation

[@Varshachoudhary8602]

Thank you so much mam ...you have cleared the concepts very nicely

[@FatemaMurtaza-o1r]

Thank you ma'am for providing notes in description part. It help alot in writing the answer. Just a request provide a little more descriptive notes.

[@diyaagarwal2483]

The video was really nice but could have provided written definition and explanation of points.

[@economicswithkusummaheshwa926]

Thankyou. It's already there in the description:)

[@aniketpanwar1840]

Hlo mam. Pareto efficiency hi Pareto optimality h kya ?

[@economicswithkusummaheshwa926]

Yeah!

[@shakiramukhtar7274]

Maam kindly tell me which book to follow for this topic... Rather which book u have consulted for this topic.. Kindly reply

[@economicswithkusummaheshwa926]

H.L Ahuja, Koutsoyiannis, K.N. Verma, J.M. Joshi etc. If you wish to buy one out of them then I will suggest go for K. N Verma. It's comparatively balanced yet comprehensive.

[@Varshachoudhary8602]

We have to explain all the all the conditions of pareto optimality or we can skip one or two

[@economicswithkusummaheshwa926]

First three are must in case of UG classes while for higher classes , all 7 are required.

[@surajparkash3572]

Please make a video series of micro and macro economics madam🙏

[@economicswithkusummaheshwa926]

This channel has approx 114 videos of Micro & Advanced Micro. Still if you are not finding some concept of Micro then do write, I will try to cover that too. After completion of Welfare, I will definitely take Macro. Thank you for the feedback. GBU:)

[@tsusolayimchunger3115]

Hello ma'am can you explain in English? It's so difficult to understand properly 😪

[@economicswithkusummaheshwa926]

Those who demand Hindi videos will scold me:-)