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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.
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