Categories: Investing Essentials

Pareto Efficiency

Pareto Efficiency is an economic state or scenario which can be referred to as the optimum allocation of resources and they cannot be reassigned or reallocated to another person to make them better or task without making the one person or one task worse than their original form.

This concept is considered more from the theoretical perspective as in the practical world it is impossible to apply as there is constant room for improvement.

Pareto Efficiency simply identifies or implies the allocation of resources in an optimal manner. However, it is important to note that such allocation does not always imply a fair distribution of resources or opportunities.

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