The Fundamental Theorem of Welfare Economics:
A)shows that the allocation of resources generated by a complete system of perfectly competitive markets results in all consumers attaining the same utility level.
B)refers to the biblical observation that "the poor ye shall always have with you."
C)implies that no intervention in the workings of markets can be justified on efficiency grounds.
D)holds that the allocation of resources generated by a complete system of perfectly competitive markets is Pareto efficient.

Question

Quizplus · Accepted Answer

The Fundamental Theorem of Welfare Economics states that any competitive equilibrium leads to a Pareto efficient allocation of resources, meaning that no one can be made better off without making someone else worse off. It does not imply uniform utility levels across consumers (A), is not a biblical reference (B), and does not suggest that market interventions are never justified on efficiency grounds (C).