A principle states that when the supply and demand curves cross in a competitive market, Pareto efficiency is achieved. This principle is called
A)the first theorem of cost minimization.
B)the first theorem of utility maximization.
C)equilibrium.
D)the first theorem of welfare economics.
E)price equals marginal cost.

Question

Quizplus · Accepted Answer

The principle described in the question is known as the first theorem of welfare economics, which states that in a competitive market, the intersection of supply and demand curves results in Pareto efficiency, meaning that no one can be made better off without making someone else worse off.

A Principle States That When the Supply and Demand Curves