If your consumption of toothpaste produces positive externalities for your neighbors (which you ignore), then you are consuming less toothpaste than is Pareto optimal.

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Travis Welch · Accepted Answer

Final Answer : True, Explanation :  Pareto optimality requires that there is no way to make one person better off without making at least one person worse off. In this case, the consumption of toothpaste by one person produces positive externalities for their neighbors, meaning that their consumption benefits others without any cost to themselves. Therefore, consuming more toothpaste would make both the individual and their neighbors better off, and thus consuming less toothpaste than is socially optimal is not Pareto efficient.

If your consumption of toothpaste produces positive externalities for your neighbors (which you ignore), then you are consuming less toothpaste than is Pareto optimal.

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