Asked by
Madison Santoro
on Oct 14, 2024
Verified
In a pure exchange economy if the initial allocation is Pareto optimal, then competitive equilibrium is fair.
Pareto Optimal
A situation in which it is impossible to make any individual better off without making at least one individual worse off.
Pure Exchange Economy
An economic model where households or individuals purely exchange goods and services without any production.
Competitive Equilibrium
A state in a market-based economy where supply exactly matches demand, and market prices stabilize.
- Understand the fundamentals of Pareto optimality and its importance in the distribution of economic resources.
- Assess the repercussions of impartiality and covetousness in determining allocations.
Verified Answer
AC
Learning Objectives
- Understand the fundamentals of Pareto optimality and its importance in the distribution of economic resources.
- Assess the repercussions of impartiality and covetousness in determining allocations.
Related questions
In a Competitive Equilibrium, No Matter How Different Their Preferences ...
In a Pure Exchange Economy, If an Allocation Is Pareto ...
An Allocation That Is Worse for Somebody Than the Initial ...
If a Social Welfare Function Is an Increasing Function of ...
An Allocation Is Fair If Whenever One Person Envies Another ...