Social Welfare Under Perfect Competition

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Social Welfare Under Perfect Competition To achieve maximum social welfare the allocation  of resources would be considered efficient if marginal ate of substitution between any two commodities for a consumer is equal to the marginal rate of  transformation between these two commodities for  every producer. This would lead to the equality of  the  ratio of marginal utilities and the […]

MARKET STRUCTURE AND SOCIAL WELFARE

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MARKET STRUCTURE AND SOCIAL WELFARE In The Pascal sense if a policy change makes at least one individual better without making anyone rose off II is said to maxi miss social welfare Let. us see how this social optimum can be attained under  different market structures In this connection we shall examine the possibility of attaining maximum  social welfare under […]

Scitovsky Compensation Principle

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Scitovsky Compensation Principle We may discuss this principle in two parts vi the Tsiolkovsky Paradox and Tchaikovsky Double Cr criterion Tchaikovsky pointed out a contradiction Waldorf Hicks Compensation Principle Both Wald. and Hicks   considered a movement from situation  to situation B and the benefit resulting there for Tsiolkovsky pointed   it that a backward movement  from situation IS to […]

A FURTHER NOTE ON COMPENSATION PRINCIPLES

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A FURTHER NOTE ON COMPENSATION PRINCIPLES The Social Welfare Function and. theory of Compensation  Principles are sometimes treated as attempts  rehabilitate welfare economics and together are referred  to as New Welfare Economics. This was  necessary  because of wide criticism of Pavlovian and Partisan analyses. Pareto held that if any policy   hang  benefited some people without harming […]

OBSTACLES TO WELFARE MAXIMIZATION

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OBSTACLES TO WELFARE MAXIMIZATION If maximum welfare is to be attained optimum allocation of factors of production is essential. This   allocation must he in keeping with the consumer’s preferences. For this purpose there must prevail perfect competition But in the real world perfect competition docs not prevail instead there is imperfect competition This constitutes a big obstacle in the way […]

Socialist Ideology

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Socialist Ideology Welfare economics provides strong support  to socialist ideology. Only a socialist dictatorship can bring   bout conditions of production exchange and distribution which may be conducive to welfare   maximization Free enterprise economy where conditions of perfect competition do not exist  is helpless in  he matter A strong government  action is called for to establish a social […]

National Income

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National Income The welfare economist is able to demonstrate the intimate relation between national income and welfare. Increase in national income or favorable redistribution  favorable to the poor is  bound  o increase the measure of welfare in  the community Seuss can be achieved through well known  fiscal evinces of taxation bounties or beneficent public expenditure. Thus the egalitarian […]

Monopoly versus Competition

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Monopoly versus Competition economist j opposed to monopoly since it stands in way of optimum conditions of production and exchange. There is therefore strong support for perfect  competition on welfare grounds. It is only under perfect competition that both by qualifying utility to the price and by qualifying marginal bulimics of the carious item the consumers and producers […]

Taxation

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Taxation When a Government has to resort to taxation to raise resources. welfare will be increased if the revenue is ought to be raised through direct taxation  income tax rather than indirect taxation sales tax  or excise duty If a person pays income tax instead of the same amount as a sales tax on the purchase  of a commodity […]

Rationing

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 Rationing From the point of view of maximizing welfare  points rationing which gives each consumer some  fixed umber of ration points) is better than fixed rationing  which permits a consumer to buy only a fixed quantity of each commodity. This is so because the  points rationing gives a consumer a wide choice n making his purchases even […]