Decide whether each of the following statements is true or false and provide a brief justification to your answer. (Note: No mark will be given to true/ false answers without any justification. Provide up to two sentences of justification.)

a) By Pareto principle, top 1% of people in the wealth distribution owning 99% of the total wealth would be acceptable as long as it is efficient. (6 marks)

b) Compared with profit, quasi-rent is a better measure of the welfare change for the night clubs in Northbridge that were required to shut down during COVID-19. (6 marks)

c) By compensation principle, a policy should be implemented if the gain is larger than the loss. After the implementation, the winner should always compensate the loser in order to have the loser agree to the policy change. (6 marks)

d) One can always compare two second-best points by using the compensation principle. (6 marks)

e) To calculate consumer surplus, one can compare the change in income resulted from the change in price while holding utility fixed. (6 marks)