Economics · Pareto Optimality Conditions
Consider these statements about Pareto optimality conditions in general equilibrium: A. Efficiency in exchange requires that the MRS between any two goods is equal across all consumers. B. Efficiency in production requires that the MRTS between any two inputs is equal across all firms using those inputs. C. Efficiency in product-mix requires that the MRS (consumers) equals the MRT (producers) for any pair of goods. D. A competitive equilibrium satisfies all three Pareto marginal conditions simultaneously. E. The Pareto optimality conditions are both necessary AND sufficient for a social welfare maximum. Which statements are CORRECT?
- 1A, B, C and D only✓
- 2A, B and C only
- 3A, C and D only
- 4B, C, D and E only
Correct answer
A, B, C and D only
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