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Microeconomics II
book

Microeconomics II

by D.N. Dwivedi
August 2011
Intermediate to advanced content levelIntermediate to advanced
368 pages
14h 51m
English
Pearson India
Content preview from Microeconomics II
296 Chapter 14
Figure 14.6 Corner Solution of Pareto Optimality
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EXTERNALITIES AND PARETO OPTIMALITY
e foregoing conclusion that perfect competition leads to Pareto optimality is based upon the assump-
tion that there are no external eects on or from consumption and production. is assumption implies
(i) that production function of each producer is independent of others and (ii) utility function of each
individual is independent of others. In reality, however, production by one rm is aected by produc-
tion by other rms and consumption of one consumer aects the consumption of other consumers and
producers. Such eects are known ...
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Publisher Resources

ISBN: 9788131797655