Answer both questions. Each question carries ten marks. There is a word limit on

Answer both questions. Each
question carries ten marks. There is a word limit oneachquestion of 500
words submissions exceeding this limit will be penalised.Question 1:Pareto
improvementa)
Explain the following concepts illustrating your answer with diagrams where
appropriate:(i) an actual Pareto
improvement;(ii) a potential Pareto
improvement;(iii) the Kaldor-Hicks criterion. (6
marks)b) Which of
these concepts can be used to formulate a practical choice criterion in
benefit-cost analysis and why may it be difficult to use one or more of the
others in this way. (4 marks)Question 2: Choice criteriona) Using a hypothetical example explain the following
concepts:(i) net
present value;(ii) benefit-cost ratio. (5
marks)b)
Explain where and why the use of these is appropriate. (5 marks)