Pareto Efficiency free essay sample

For the Union, it is preferable to have a high health care over a high pension. For management, it is preferable to have a low health care over low pension. Intuitively, this means that an efficient agreement would be to have high health care and low pension. b. Pension Health CareUnionManagementPareto LowLow03Yes LowHigh152Yes High Low51No HighHigh200Yes Option three, high pension and low health care is Pareto inefficient. You can see that visually in the graph (it is below the line of efficiency) and in the chart as well. It is Pareto efficient because both parties stand to gain from an alternative- the union would gain ten points if they moved to low pension and management would gain one. c.As you can see, the Pareto efficient agreements do not change. This is because the preferences didn’t change per say, just the scale of the preferences. Just as in part b, high pension- low health care is Pareto inefficient because both groups would gain from moving to low pension- high health care. We will write a custom essay sample on Pareto Efficiency or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Pension Health CareUnionManagementPareto LowLow030Yes LowHigh1520Yes High Low510No HighHigh200Yes Level of technological supportTimingGuaranteeNorthstarGeneral Data SystemsPareto Efficient? S1I18Yes530160N S1I18No420260Y S1I24Yes250300Y S1I24No0440Y S2I18Yes670100N S2I18No560200Y S2I24Yes370230N S2I24No120370Y S3I18Yes9000Y S3I18No790100Y S3I24Yes45080N S3I24No200220N 5. b.With these reservation points, the highlighted agreements are now Pareto efficient and acceptable to both parties. Level of technological supportTimingGuaranteeNorthstarGeneral Data SystemsPareto Efficient? S1I18Yes530160N S1I18No420260Y S1I24Yes250300Y S1I24No0440Y S2I18Yes670100N S2I18No560200Y S2I24Yes370230N S2I24No120370Y S3I18Yes9000Y S3I18No790100Y S3I24Yes45080N S3I24No200220N c. It depends on how much the price may change. If the price is going to change greatly, it could drive Northstar’s possible points to zero. If this were the case, then previously non-Pareto efficient outcomes would become Pareto efficient outcomes.