In a Competitive Pure Exchange Economy, If the Initial Endowment

question 41

True/False

In a competitive pure exchange economy, if the initial endowment is on the diagonal line between the two origins, then, according to the first welfare theorem of economics, there must always be a competitive equilibrium in which no trade takes place.

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Definitions:

Signoria

A form of government in Italian city-states during the medieval and Renaissance periods, characterized by rule by a single lord or a hereditary ruling family.

Medici

A powerful and influential family in Florence, Italy, during the Renaissance, known for their support of the arts, significant political control, and the production of four popes.

Merchant Capitalism

An early phase in the development of capitalism where trade and the merchant class played a primary role in economic life.

Condottieri

Condottieri were leaders of mercenary soldiers in Italy during the Middle Ages and Renaissance, hired by city-states and the papacy for military purposes.