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Defining efficiency criteria is a traditional concern of welfare economics. Whereas microeconomics deals with the behaviour of individual economic agents and the workings of markets, the task of welfare economics is to develop criteria for evaluating economic policy measures and economic regulatory systems. Welfare economics has both a positive and a normative element. On the one hand it attempts to explain how certain economic policy measures or economic regulatory systems influence a country’s economic development. On the other hand it is concerned with evaluating social states, i.e.~finding out whether the effects triggered by a particular action are thought to have raised or lowered welfare.
KeywordsPareto Optimum Competitive Equilibrium Initial Endowment Monetary Unit Social Utility
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