Given the assumptions for a general equilibrium, an allocation is efficient if:
A)it is allowed by law.
B)MRS is identical for all individuals.
C)a majority of voters support it.
D)it is Constitutional.

Question

Quizplus · Accepted Answer

An allocation is efficient in a general equilibrium if the marginal rate of substitution (MRS) is identical for all individuals. This means that no one can be made better off without making someone else worse off, and resources are allocated in the most productive manner possible. The other options are not relevant to determining efficiency in a general equilibrium.

Given the Assumptions for a General Equilibrium, an Allocation Is