The only allocation that is Pareto efficient is that in which person 1 has all the applies and person 2 has all the bananas. For any other allocation, one of the persons has some units of the good she does not like, and would be better off if the other person had those units.

Which market structure is Pareto efficient?

The Pareto optimally has been supported by perfect competition as a market structure where efficiency is sustainable, but it is imperfect competition where there are higher increasing returns and better redistribution, through innovation and growth, promoted by the market size.

What is an example of Pareto efficiency?

Consider another example: the sale of a used car. The seller may value the car at $10,000, while the buyer is willing to pay $15,000 for it. A deal in which the car is sold for $12,500 would be Pareto efficient because both the seller and the buyer are better off as a result of the trade.