Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): When everyone trades in the competitive market place, all mutually beneficial trades are completed and the resulting equilibrium allocation of resources is economically efficient.
Reason (R): Even if a trade from an inefficient allocation makes everyone better off, the new allocation is not necessarily efficient.
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Welfare economics and social choice has come up 62 times in 6 exams since 2004.
This question is on The fundamental theorems of welfare economics, part of Welfare economics and social choice in Microeconomics.
When competitive markets deliver efficient outcomes and how transfers can reach any efficient outcome.
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Question from the UGC-NET 2025 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.