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:

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.

Allowance Method

The allowance method is an accounting technique used to estimate and account for potential credit losses on accounts receivable, recognizing them as an expense before they occur.

Direct Write-off Method

An accounting technique for recognizing bad debts where specific uncollectible accounts are directly written off against income when deemed unrecoverable.

Aging of Receivables Method

An accounting technique used to estimate the amount of and provision for doubtful accounts by categorizing receivables according to the length of time they have been outstanding.