Economics 9708 · AS & A Level · Behavioural economics
Explain what is meant by equity, allocative efficiency and Pareto optimality. Consider whether a link exists between them.
Discuss whether a better use of resources is always achieved if there is a market structure where firms stay small.
This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Equity – fairness; efficiency – making best use of available resources; Pareto – no person can be made better off without making someone else worse off. Allocative efficiency and Pareto are linked. There is no link to equity – Pareto optimality does not necessarily imply equity.” …