Imagine an economy where the government allocates resources among its citizens. Recently, the government divided $1,000 among ten citizens. The amount each citizen received is displayed in the table below

Citizen Amount Received ($)
1 100
2 150
3 50
4 10
5 90
6 200
7 10
8 190
9 20
10 180

a) The government claims that this is an efficient allocation. Do you agree?
b) Social workers in the economy criticized the government on the basis of this allocation. What could be the grounds for such criticism?

a) Yes, the allocation made by the government is efficient. The sum of the amounts received by the ten individuals equals $1,000. Therefore, the pool of resources has been completely distributed among the ten citizens. It is no longer possible to make someone better off without making someone else worse off. This kind of efficiency is referred to as Pareto efficiency, and the government is correct in making a claim of efficiency in allocating the resource.
b) Social workers could have criticized the government even though the allocation is efficient. This is because an efficient allocation does not necessarily imply equity. Equity is concerned with the distribution of resources across society. In other words, equity means an even distribution of goods across society. The government's allocation can be criticized on the ground that the distribution is unequal.