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【正文】 n. 321 Implications ? Pareto efficiency emerges in a petitive economy. ? It requires that prices be in the same ratios as marginal costs, and petition guarantees this condition is met. ? Efficiency also requires that the additional cost of each modity be reflected in its price. 322 The Second Fundamental Theorem Of Welfare Economics 323 Efficiency versus Equity Adam Eve 0 0’ s r Apples per year Fig leaves per year q p5 p3 324 Utility Possibilities Curve Eve’s utility Adam’s utility U U p3 q p5 325 Social Indifference Curve Eve’s utility Adam’s utility W = F(UAdam, UEve) Increasing social welfare 326 Maximizing Social Welfare Eve’s utility Adam’s utility i ii iii 327 But the government doesn’t have to intervene with the markets. 328 The Second Fundamental Theorem Of Welfare Economics ? The society can attain any Pareto efficien
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