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The Two Theorems of Welfare Economics consists of two concepts that govern an entire branch that is known as welfare economics. These two concepts can be difficult to understand and apply when students need to apply them in real life situations. These concepts are necessary as several other topics which are interrelated to them cannot be understood until and unless these two topics are covered.
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What are The Two Theorems of Welfare Economics?
The first theorem states that a competitive equilibrium will lead to allocation of resources according to Pareto allocation techniques. The second theorem states the exact opposite of what is stated in this first theorem. The invisible hand hypothesis is confirmed by this first theorem and this hypothesis states that efficient allocation of resources can be achieved through competitive markets. When markets are competitive, then the goods are sold quickly and this maintains the supply and demand cycle. This theorem along with the second theorem is discussed in-depth in The Two Theorems of Welfare Economics Assignment Help provided the best team.
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