Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

 
5.7 QUESTIONS 
 
1. Explain the problem of existence of general equilibrium. 
2. Are all points on the contract curve for exchange equally 
desirable from society‘s point of view? Why? 
3. How will an increase in the quantity of labour available to 
society affect its Edgeworth box diagram for production? What 
effect will that have on the contract curve for production? 
4. Illustrates the derivation of the production possibilities frontier. 
 
 
 
 
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6 
 
SOCIAL WELFARE 
 
Unit structure 
 
6.0 Objectives 
6.1 Introduction 
6.2 Pareto Optimality Criterion of Social Welfare 
6.3 Marginal Conditions for a Pareto Optimal Resource Allocation 
6.4 Perfect Competition and Pareto Optimality 
6.5 Summary 
6.6 Questions
 
6.0 OBJECTIVES 
 
To know the meaning and importance of the concept of Pareto 
optimality criterion of social welfare 
To know marginal conditions for a Pareto optimal resource 
allocation 
To understand Pareto optimality under perfect competition
6.1 INTRODUCTION 
 
Promotion of economic welfare is generally accepted as 
important goal of economic policy. Welfare economics is an 
important branch of economics which is concerned with the 
evaluation of alternative economic limitations from the point of view 
of the well-being of the society. 
In this unit to measure the social welfare we begin with the 
Pareto optimality criterion of social welfare, then for the attainment 
of Pareto optimal situation in an economy we need to be satisfied 
three marginal conditions and finally for the attainment of Pareto 
optimality under perfect competition we lay down the conditions 
necessary for Pareto optimality.