First Fundamental Theorem of Welfare Economics

Definition

Health Economics

  • The proposition that, given particular assumptions, competitive markets are Pareto optimal. The assumptions include these: markets are complete ; property rights are well-defined and costlessly enforced, so that buyers and sellers can trade freely in all current and future goods; producers and consumers are selfish maximizers of their benefits and minimizers of their costs; that within these perfectly competitive markets prices are known by all individuals and firms; that the use of the price mechanism does not itself consume resources.
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