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Equity Cannot Be Separated from Efficiency

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In its most sophisticated mathematical formulation that we are now going to address, NC values-opacity is rooted in the refined mathematical formalisms of General Equilibrium Theory considered to be at the core of the theoretical foundations of the neoclassical vision. The three “General Theorems of Welfare Economics” supposedly provide irrefutable proof of Adam Smith’s vision that individual agent utility and profit maximization will optimize social welfare in a competitive market economy under assumptions that are thought to be an ideal approximation of how such an economy would work.

The Fundamental Theorems of Welfare Economics (FTWE)

Some of the key assumptions of the FTWE are that all individuals behave as rational individual maximizers of their own self-interest in a perfectly competitive market with: constant returns to scale production, no market externalities in production and consumption, diminishing marginal utility, and diminishing returnsto capital and labor and...

Keywords

Marginal Cost Price Elasticity Fundamental Theorem Indifference Curve Initial Endowment 
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Copyright information

© The Author(s) 2016

Authors and Affiliations

  1. 1.Benedictine UniversityIllinoisUSA

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