Pareto efficiency and social surplus There are two citizens: A and B. An alternative is defined by x = (24, B). Individual preferences are represented by uª (x) = xª, u³ (x) = x³. There are only 3 feasible alternatives: x₁ = (0,0), x₂ = (2, 2), and x3 (1, 10). 2.1 Which alternatives are Pareto efficient? 2.2 Which alternatives maximize social surplus? Now suppose that A is altruistic and has preferences represented by u^ (x)=xA + \frac{x^B}{2} 1 2.3 Which alternatives are Pareto efficient? 2.4 Which alternatives maximize social surplus?