A framework for deciding on the optimal (best) use of scarce resources. The branch of economics that is concerned with normative questions relating to the well being of society as a whole; in particular, it seeks to establish a ranking in terms of welfare between different allocations of resources. Unfortunately, the only widely agreed criterion for judging between alternatives is Pareto optimality, which is very weak. Thus, although welfare economics concerns itself with such important questions as taxation, distribution, regulation of externalities, government policy, etc., it has been of limited practical use. Source: MAANZBack to previous
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