In the context of marginal analysis, which of the following scenarios represents a situation where Pareto efficiency is achieved?

Pareto efficiency occurs when resources are allocated in a way that makes at least one person better off without making anyone else worse off. In marginal analysis, we look at the benefits and costs of small changes in resource allocation. For example, imagine a situation where a bakery and a coffee shop share a space. If the bakery increases its production of bread, and this makes its customers happier without reducing the coffee shop’s sales, then this change can be considered Pareto efficient. In this case, both businesses are benefiting from the arrangement, showing that resources are being used in the most efficient way possible.