Suppose that a change in government policy affects 3 groups of citizens. Member of group A would gain a total of $100 million, members of group B would lose a total $200 million, and members of group C would gain a total of $75 million.
Then considering 3 entities (each group as a whole), which of the following statements is correct?
I. The policy change, with no side payment, would be a Pareto improvement.
II. The policy change, with no side payment, would be a potential Pareto improvement.
III. A side payment exists that, in theory, could make this policy change a Pareto improvement.
- A. I and II
- B. I, II and III
- C. I only
- D. II only
- E. III only
- F. II and III
- G. None of the three statements are correct for this policy change.