Which of the followings is not a marginal condition of pareto optimality criteria?
Efficiency equates consumers’ marginal substitution rates, firms’ factor substitution rates, and consumption MRS with output transformation rates. Equating an output…
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Which of the followings is not a marginal condition of pareto optimality criteria?
Answer and explanation
Correct answer D
Efficiency equates consumers’ marginal substitution rates, firms’ factor substitution rates, and consumption MRS with output transformation rates. Equating an output transformation rate to the wage–rental ratio mixes different relative prices and is not the stated Pareto condition.
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UGC NET Economics