Solution

ID: past-exam-of-the-mathematics-course-of-the-university-of-cambridge/2004/iii/paper-36/2/a/solution

Use the exact-resource-balance convention for an exchange economy. If is the integrable initial-endowment profile, a feasible consumption allocation is a measurable integrable function with
It is Pareto efficient if there is no other feasible consumption allocation satisfying for almost every consumer and on a set of positive measure. A Pareto improvement makes nobody worse off, up to a null set, and makes a positive-measure group strictly better off. Positive measure is essential: reallocating to a single consumer of zero mass does not constitute an aggregate Pareto improvement.

New to topics? Read the docs here!