Which of the following is required to rule out the possibility of contradictory results in the…
The Scitovsky double criterion addresses the reversal problem in the Kaldor-Hicks compensation test. A change must pass the forward compensation test, while the reverse…
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Which of the following is required to rule out the possibility of contradictory results in the Kaldor-Hicks criterion?
Answer and explanation
Correct answer C
The Scitovsky double criterion addresses the reversal problem in the Kaldor-Hicks compensation test. A change must pass the forward compensation test, while the reverse change must fail it; this prevents both directions from being classified as improvements.
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Gujarat SET (GSET)