The Significance of the First Fundamental Theorem of Welfare Economics

question 48

Multiple Choice

The significance of the First Fundamental Theorem of Welfare Economics is that:

• A)even if the economy is in competitive general equilibrium, significant intervention will be required to bring about economic efficiency.
• B)there is a possibility that an economy could simultaneously attain an efficient allocation and one in which the resulting distribution of utility is in some sense equitable.
• C)Even though households and firms behave independently and each pursues its own self-interest, the resulting equilibrium is efficient in the sense that it exploits all possible mutually beneficial gains from trade or from reallocation of inputs.
• D)resources are scarce in the economy and so must be managed for the long term.

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Definitions:

Caudate Nucleus

A curved, elongated nucleus located within the brain, playing a key role in various functions including motor processing, learning, memory, and emotion regulation.

Corpus Striatum

Caudate nucleus, putamen, and globus pallidus; so-named because of the striations caused by intermixing of gray and white matter, which result from the number of tracts crossing the anterior portion of the corpus striatum.

Subthalamic

Pertaining to the location or region under or beneath the thalamus in the brain, often referring to the subthalamic nucleus involved in motor control.

Central Sulcus

A prominent landmark of the brain, separating the parietal lobe from the frontal lobe.