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:

Barriers to Entry

Barriers that impede or block new entrants from smoothly accessing a market or business sector.

Plant Size

Plant size refers to the capacity or physical dimensions of a facility where goods are produced, impacting the volume of production and potential economies of scale.

Diminishing Marginal Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase and may decrease.

Number of Workers

The total count of individuals engaged in the labor force of an organization, sector, or economy at any given time.