Question
6. Which of the following is INCORRECT regarding efficiency criterion? (a) If the sign of aggregate net benefits is positive for a government project and
6. Which of the following is INCORRECT regarding efficiency criterion?
(a) If the sign of aggregate net benefits is positive for a government project and the resource allocation after implementing the project is not Pareto efficient compared to the status quo, reallocating resources can achieve Pareto efficient outcome compared to the status quo.
(b) If the Potential Pareto efficiency rule is solely applied for government's decision-making process, projects that yield negative aggregate net benefits might be implemented sometimes.
(c) If the Actual Pareto efficiency rule is applied for government's decision-making process, the required size of information for government would increase compared to a situation in which Potential Pareto efficiency rule is applied.
(d) On the potential Pareto frontier, there is no room to make a welfare improvement without making anyone worse off.
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