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:

Dominant Position

A situation where a company or entity has a significant or controlling influence over a market, allowing it to set prices or control the supply of products or services.

Nondisclosure

The obligation to keep certain information confidential and not share it without authorization.

Rescinding Contract

The process of unilaterally terminating a contract by one of the parties involved, effectively rendering the agreement null and void from the outset.

Mistakes

Errors or misunderstandings that can occur in various contexts, such as in contracts, decisions, or actions.