Consider a pure exchange economy with complete markets so that the Welfare Theorems apply. Which 2 of the following 8 options are false: If all Walrasian Equilibria are not Pareto efficient then someone's preferences must violate local non-satiation. If everyone's preferences satisfy local non-satiation then every Walrasian Equilibrium must be Pareto efficient. If there exists some Pareto efficient allocation which cannot be supported as a Walrasian Equilibrium for some choice of initial endowment, then at least one person has preferences violating at least one of local non-satiation, continuity and convexity. If preferences violate all three of local non-satiation, continuity and convexity then there must exist Pareto efficient allocations that can not be supported as Walrasian Equilibria for some choice of initial endowment. If everyone's preferences satisfy monotonicity then every Walrasian Equilibrium must be Pareto efficient. If everyone's preferences satisfy local non-satiation, continuity and convexity then every Pareto efficient allocation can be supported as a Walrasian Equilibrium for some choice of initial endowment.

Consider a pure exchange economy with complete markets so that the Welfare Theorems apply. Which 2 of the following 8 options are false: If all Walrasian Equilibria are not Pareto efficient then someone's preferences must violate local non-satiation. If everyone's preferences satisfy local non-satiation then every Walrasian Equilibrium must be Pareto efficient. If there exists some Pareto efficient allocation which cannot be supported as a Walrasian Equilibrium for some choice of initial endowment, then at least one person has preferences violating at least one of local non-satiation, continuity and convexity. If preferences violate all three of local non-satiation, continuity and convexity then there must exist Pareto efficient allocations that can not be supported as Walrasian Equilibria for some choice of initial endowment. If everyone's preferences satisfy monotonicity then every Walrasian Equilibrium must be Pareto efficient. If everyone's preferences satisfy local non-satiation, continuity and convexity then every Pareto efficient allocation can be supported as a Walrasian Equilibrium for some choice of initial endowment.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 3CQQ

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