you value your economics textbook at $10. someone else values it at $25, and that person is willing to pay you $20 for your textbook. would selling your textbook to this person for $20 be pareto efficient? a. no, because you did not receive the maximum amount the other person would have been willing to pay for the textbook. b. no, the person paid you $20 for the book so his net benefit was only $5, whereas your net benefit was $10. for this change to be pareto efficient, each of you should have the same net benefit. c. yes, because both of you are better off as a result of the trade. d. yes, because even though you gain from the trade and he loses, there is the potential for you to compensate him for his loss.

When resources are distributed in a way that no one may benefit without harming someone else, this is known as Pareto efficiency, also known as allocative efficiency. No individual or preference criterion can be made better off without at least one of them becoming worse off, which is known as Pareto efficiency or Pareto optimality. Another illustration would be the purchase of a used vehicle. The buyer may be willing to pay $15,000 for the car but the seller is only willing to accept $10,000 for it. A transaction where the car is sold for $12,500 would be Pareto efficient because both parties benefit from the exchange.

Hence the answer is option c

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