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SHORT ANSWERS 1- Perfect Market: “A complete, competitive, full-information general equilibrium is efficient.” Explain this statement...

SHORT ANSWERS

1- Perfect Market: “A complete, competitive, full-information general equilibrium is efficient.” Explain this statement in detail and discuss what happens when some of the conditions are violated.

2- Marx on Capitalism: Use Marx’s labor theory of value to explain the breakdown of capitalism

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Answer #1

Ans1) complete, competitive, full information, general equilibrium is efficient because In Partial equilibrium case there is no deadweight loss meaning the is no other allocation For someone else being better off without making others worse off. In a general equilibrium all the markets are in equilibrium so there is no deadweight loss in any market.

The First Welfare Theorem of Welfare Economics states A complete, competitive, full information general equilibrium is efficient. When the assumptions of the first welfare theorem do no hold it leads to market failure.

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