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explain the first fundamental theorem of welfare economics


Kumuda Behera 20th Jun, 2021
Answer (1)
ginnisachdeva02_9364270 Student Expert 20th Jun, 2021

Hi Aspirant!

The first fundamental theorem ofWelfare economics is also known as the “Invisible Hand Theorem”. This theorem states that in stable economy, a set of complete markets, with all the required information, and in best competition, will be Pareto efficient allocation of resources.  It means that no further exchange would make one person better off without making another worse off. thus, this theorem includes no intervention of the government.

Thankyou!

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