Answer to Question #99573 in Macroeconomics for annie

Question

In which case a contract between two agents may have pareto improvements?

Answer 1

Pareto improvement occurs when a change in allocation harms no one and helps at least one person, given an initial allocation of goods for a set of persons. For example, a firm may run Pareto improvement trials in which they reallocate labor resources to try to boost productivity of assembly workers without decreasing productivity of the packing and shipping workers.