The First Welfare Theorem

question 37

Multiple Choice

The first welfare theorem

• A) Tells us that, in a general equilibrium with imperfect competition, the allocation of resources is Pareto efficient
• B) Clarifies how the "invisible hand" of the market guides people toward privatly desirable choices
• C) Tells us that a general equilibrium with perfect competition is not Pareto efficient
• D) Tells us that, in a general equilibrium with perfect competition, the allocation of resources is Pareto efficient

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Definitions:

Customers' Expectations

The perceived value or quality of service or product that customers believe they will receive from a business.

Standards

Established benchmarks or norms specifying the expected levels of quality, performance, or compliance.

Quality Costs

Represents the expenses associated with preventing, detecting, and correcting defective work in products or services.

Defect Rate

A measure of the frequency at which errors or flaws occur in a manufacturing process or a product.