Question

Which efficiency criterion suggests that an outcome is efficient if total benefits exceed total costs, even if some may need compensation?

• A. Pareto Efficiency
• B. Kaldor-Hicks Efficiency
• C. Marginal Utility
• D. General Equilibrium

Answer 1

Answer:

B. Kaldor-Hicks Efficiency

Kaldor-Hicks Efficiency considers an outcome efficient if total benefits are greater than total costs, with the possibility of compensating those who lose out, though compensation is not mandatory.