If a Policy Helps Some but Harms Others

question 35

Multiple Choice

If a policy helps some but harms others,

• A)the result is a Pareto improvement for the people who are helped.
• B)then the cost-benefit analysis will show a net increase in surplus and is therefore desirable.
• C)we cannot use the Pareto principle to evaluate whether or not the policy is desirable.
• D)it is too hard to determine whether or not the outcome is desirable.

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Definitions:

Products

Goods or services that are created through a process of production and can be offered in a market to satisfy a need or want.

Factor Inputs

The resources used in the production of goods and services, such as labor, land, and capital.

Long Run

A period in economics where all factors of production and costs are variable, allowing all inputs to be adjusted.

Short Run

A period in which at least one factor of production is fixed, limiting the ability of a business to expand its output.