Any Competitive Equilibrium Is Pareto Efficient Because,with a Competitive Equilibrium

question 6

Multiple Choice

Any competitive equilibrium is Pareto efficient because,with a competitive equilibrium,

• A) the marginal rates of substitution are equal for all consumers.
• B) the price line is the contract curve.
• C) mutual gains from trade exist.
• D) the slope of the price line equals the ratio of the MRS for all consumers.

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Definitions:

Additional Benefits

The perks or supplementary advantages that come in addition to the primary benefits of a product, service, or policy.

Marginal Analysis

Marginal Analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Relevant Costs

Only those costs that will be affected by a decision or action and therefore should be considered in decision-making.

Activity

In economic terms, refers to actions or engagements, such as production or consumption, within an economy.