Economics · General Equilibrium Theory
Assertion (A): Wicksell's contribution to general equilibrium theory involved demonstrating that in a pure exchange economy, the competitive equilibrium is determinate only if at least one price is fixed as the numeraire. Reason (R): In a system of n goods, Walras's Law renders one of the n market-clearing equations redundant, leaving (n−1) independent equations to determine (n−1) relative prices.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A is false but R is true
- 2A is true but R is false
- 3Both A and R are true but R is not the correct explanation of A
- 4Both A and R are true and R is the correct explanation of A✓
Correct answer
Both A and R are true and R is the correct explanation of A
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