1. Outline for Friday, August 8
Remember
Quiz Monday
Final Friday – don’t yet know where
Review Thursday
Quiz practice
Other pricing schemes
General Equilibrium

2. Pareto Efficiency
A change is a Pareto improvement or is Pareto-
superior if…
Is anyone better off? YES
Is anyone worse off? NO
A situation is Pareto efficient if no Pareto
improvement exists
It is inefficient if an improvement can be made

3. Pareto Efficiency for market
interventions
A Pareto improvement has
CS>0 for some consumer or PS>0 for some firm or
G>0
And CS0 for all consumers, PS0 for all firms, and
G0
A welfare improvement has
W = CS + PS + G > 0