The first fundamental theorem of welfare economics states that

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The first fundamental theorem of welfare economics states that under certain conditions, a competitive equilibrium is Pareto-optimal. This means that in a free and competitive market, the allocation of resources will result in a Pareto-optimal outcome, where no individual can be made better off without making someone else worse off. However, it is important to note that this theorem only holds under certain conditions such as perfect competition, complete information, and no externalities. In cases where these conditions are not met, a competitive equilibrium may not be Pareto-optimal.

The First Fundamental Theorem of Welfare Economics States That