The statement: "If everyone trades in the competitive marketplace, all mutually beneficial trades will be completed, and the resulting equilibrium allocation of resources will be economically efficient." is formally known as:
A) the law of supply and demand.
B) the first theorem of supply and demand.
C) the first theorem of welfare economics.
D) the first theorem of efficiency in economics.

Question

Quizplus · Accepted Answer

This statement is known as the first theorem of welfare economics, which asserts that a competitive market will lead to an efficient allocation of resources, meaning that no more mutually beneficial trades can be made. The law of supply and demand and the first theorem of supply and demand are related concepts that describe how prices and quantities adjust in a market, but they do not address efficiency. The first theorem of efficiency in economics is not a commonly used term or concept.

The Statement: "If Everyone Trades in the Competitive Marketplace, All