Question: Question 1: Project selection involves systematic cost-benefits analysis. Most private projects use profit as decision criteria but selection of public project is made on the

Question 1:

Project selection involves systematic cost-benefits analysis. Most private projects use profit as decision criteria but selection of public project is made on the basis of maximization of social welfare.

  1. Based on the context of social welfare, discuss

  1. Pareto Improvement
  2. Potential Pareto Improvement
  3. Explain if the following example is Pareto Improvement or Potential Pareto Improvement

My mom packed me a ham sandwich for lunch but I don't like ham; my friend's mom packed her a turkey sandwich for lunch, and she likes turkey and ham sandwiches equally well. Nobody else cares what we eat for lunch. So my friend and I trade sandwiches.

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