Which of the following is not a condition required for the first welfare theorem to hold:
A)No government policy interferes with the formation of prices.
B)No market actor has market power.
C)Tastes are quasilinear.
D)Income is distributed fairly before markets open.
E)(a) and C
F)(b) and (c)
G)(c) and (d)
H)(b) and (d)

Question

Quizplus · Accepted Answer

The first welfare theorem requires that no single actor has the power to set prices (meaning markets are perfectly competitive) and that there are no externalities or public goods affecting the economy. It does not require tastes to be quasilinear (C) or that income is distributed fairly before markets open (D).

Which of the Following Is Not a Condition Required for the First