As Long as Net Returns Are Positive, the Gainers Could

question 20

Multiple Choice

As long as net returns are positive, the gainers could compensate the losers and still enjoy a net increase in utility. This notion is called

• A)the Hicks-Kaldor criterion.
• B)a potential Pareto improvement.
• C)both of these answers are correct.
• D)neither of these answers is correct.

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Definitions:

Income Increases

A situation wherein individuals or entities experience a rise in their earnings or profits over a certain period.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, in contrast to a normal good.

Law Of Demand

A fundamental principle stating that, all else being equal, as the price of a product decreases, the quantity demanded increases, and vice versa.

Price Falls

A decrease in the cost of a good or service in the market.