Economics Supply And Demand Questions
Pareto efficiency refers to a situation where resources are allocated in such a way that it is impossible to make any individual better off without making someone else worse off. It represents an optimal allocation of resources where no further improvements can be made without causing harm to someone.
On the other hand, market equilibrium refers to a state in which the quantity demanded by consumers matches the quantity supplied by producers at a specific price level. It is the point where the forces of supply and demand intersect, resulting in a balance between the two.
In summary, the main difference between Pareto efficiency and market equilibrium is that Pareto efficiency focuses on the overall allocation of resources, ensuring that no one can be made better off without making someone else worse off. Market equilibrium, on the other hand, focuses on the balance between supply and demand in a specific market, resulting in a stable price and quantity.