If the initial distribution of two goods between two people is Pareto optimal, which of the following statements is TRUE?
A) It is possible to reallocate the goods between the two people so as to increase the utility of both people.
B) It is possible to reallocate the goods between the two people so as to increase the utility of one person without decreasing the utility of the other.
C) It is possible to reallocate the goods between the two people so as to increase the utility of one person, but only at the expense of the other person.
D) It is impossible to reallocate the goods between the two people so as to increase either person's utility.
E) none of the above

Question

Quizplus · Accepted Answer

In a Pareto optimal distribution, any reallocation that benefits one person will necessarily harm the other, as all resources are already efficiently allocated.

If the Initial Distribution of Two Goods Between Two People