Competitive markets lead to Pareto efficiency but not necessarily income equality.

Question

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Pareto efficiency refers to a situation in which no one can be made better off without making someone else worse off. In competitive markets, resources are allocated efficiently such that the overall economic welfare is maximized. However, this does not necessarily mean that everyone in the market will have the same income or wealth. Some individuals or groups may end up with more or less than others, depending on their specific abilities and resources.

Competitive Markets Lead to Pareto Efficiency but Not Necessarily Income