[amp_mcq option1=”make everyone better off” option2=”make someone better off and all others worse off” option3=”make someone better off and all others worse off” option4=”not make anyone better off without making someone worse off” correct=”option4″]
The correct answer is D.
A Pareto-optimal state is one in which it is impossible to make any one individual better off without making at least one individual worse off. In other words, it is a state of economic efficiency in which all resources are being used in the most efficient way possible.
Option A is incorrect because a policy change that makes everyone better off would not be a Pareto improvement, as it would not be possible to make anyone better off without making someone worse off.
Option B is incorrect because a policy change that makes someone better off and all others worse off would not be a Pareto improvement, as it would be possible to make everyone better off by not making the change.
Option C is incorrect because a policy change that makes someone better off and all others worse off would not be a Pareto improvement, as it would be possible to make everyone better off by not making the change.