Three main conditions are necessary for general equilibrium to hold in the market economy.The first requires that all consumers are in equilibrium meaning that all beneficial exchanges have been made between them.The second is that all inputs are employed in their best use meaning that costs are as low as possible for everything being produced.The third condition requires that
A)The right mix of goods is being produced
B)The distribution of income is done according to the societal values so that all the contract curves can be reached
C)All citizens are risk averse in large decisions and risk lovers in small decisions
D)Majority voting rules apply to all public decisions

Question

Quizplus · Accepted Answer

The third condition requires that the right mix of goods is being produced to ensure efficiency and welfare maximization. The distribution of income is not a necessary condition for general equilibrium to hold, nor is the behavior of citizens in terms of risk aversion or majority voting rules for public decisions.

Three Main Conditions Are Necessary for General Equilibrium to Hold