alleryStart learning →Without externalities, perfectly competitive equilibria are:
AAlways unstable
BMonopolistic
CPareto-efficient
DPareto-inefficient
Answer & Solution
Correct answer: C. Pareto-efficient
This is the First Theorem of Welfare Economics: no consumer can gain without another losing.
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Related questions
Critics say the perfect competition model wrongly shows all agents as:The equilibrium price of a perfectly competitive market is fixed where:Which markets come closest to perfect competition in practice?Which economic theorem says competitive equilibria are Pareto-efficient?In the short run, perfectly competitive firms are:A firm sells 200 units at Rs 50 each, with average cost of Rs 42 per unit. Its economic prNormal profit is treated by economists as a component of:What attracts new firms into a perfectly competitive industry?