Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): When everyone trades in a competitive marketplace, all mutually beneficial trades are completed and the resulting equilibrium allocation of resources is economically efficient. Reason (R): Even if a trade from an inefficient allocation makes everyone better off, the new allocation is not necessarily efficient. In the light of the above statements, choose the most appropriate answer from the options given below:

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Economics · Microeconomics - General Equilibrium and Efficiency

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Both (A) and (R) are correct but (R) is not the correct explanation of (A)

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Answer 1

Both (A) and (R) are correct and (R) is the correct explanation of (A)

Answer 2

Both (A) and (R) are correct but (R) is not the correct explanation of (A)

Answer 3

(A) is correct but (R) is not correct

Answer 4

(A) is not correct but (R) is correct

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