Neo-Classical Political Economy

a) What is Pareto optimality? What is the importance of the price of commodities in the achievement of Pareto optimality?
b) What is the significance or important or property rights, according to the neo-classical approach?
c) What is an externality? Provide an example. According to neo-classical theory, how can the free market account for externalities and what role can the government play in addressing externalities?
d) What is the significance or meaning of public goods/collective consumption goods, for the neo-classical approach?

Sample Solution