According to the General Equilibrium Model, an economically efficient allocation of resources occurs when

Question

Quizplus · Accepted Answer

An efficient allocation occurs when the producer's MRT (marginal rate of transformation) is equal to the consumer's MRS (marginal rate of substitution), satisfying option A. However, option B is not necessarily true as consumers can have different preferences and thus different MRSs. Option C is false because an efficient allocation means there are potential welfare-improving trades that can be made. Therefore, option D is the best choice as it encompasses all of the necessary conditions for an efficient allocation of resources according to the General Equilibrium Model.

According to the General Equilibrium Model, an Economically Efficient Allocation