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Illustrate and explain how the two fundamental theorems of welfare economics describe the relationship between competitive markets...

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Economics

Illustrate and explain how the two fundamental theorems ofwelfare economics describe the relationship between competitivemarkets and Pareto efficiency

Looking for a proper solution with all relative diagramsincluded. I know what the theorems are and am looking for anemphasis on the \"how\" they describe the relationships

Approx 400 words

Answer & Explanation Solved by verified expert
4.1 Ratings (792 Votes)
Here 2 fundamental theorems are try to explainFollowing are the fundamental theorems1 First fundamental theorem also known as theInvisible Hand TheoremThe main idea here is that markets lead to social optimum Thus nointervention of the government is required and it should adoptonly laissez faire policies However those who supportgovernment    See Answer
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