The Significance of the First Fundamental Theorem of Welfare Economics

Multiple Choice

The significance of the First Fundamental Theorem of Welfare Economics is that:

A) even if the economy is in competitive general equilibrium, significant intervention will be required to bring about economic efficiency.
B) there is a possibility that an economy could simultaneously attain an efficient allocation and one in which the resulting distribution of utility is in some sense equitable.
C) Even though households and firms behave independently and each pursues its own self-interest, the resulting equilibrium is efficient in the sense that it exploits all possible mutually beneficial gains from trade or from reallocation of inputs.
D) resources are scarce in the economy and so must be managed for the long term.