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Which of the following statements about a competitive equilibrium allocation are correct? a. It is the best possible allocation. b. No buyer's or seller's surplus

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Which of the following statements about a competitive equilibrium allocation are correct?

a. It is the best possible allocation.

b. No buyer's or seller's surplus can be increased without reducing someone else's surplus.

c. The allocation must be Pareto efficient.

d. The total surplus from trade is maximized.

I am confused why C is not right answer. According to the explaination attached below, it mentioned that competitive equilibrium allocation is pareto efficiency even though the producer surplus would decrease as you can see the second picture that I attach.(when E moves to F) Can someone please clarify it?

image text in transcribedimage text in transcribed
10,000 Marginal cost m Isoprofit curve: P* = $5,440 $150,000 Price, marginal cost ($) Isoprofit curve: $63,360 Demand curve O O Q* = 32 Qo 120 Quantity of cars, QPareto efficiency LINK At the competitive equilibrium allocation in the bread market, it is not possible to make any of the consumers or firms better off (that is, to increase the surplus of any individual ) without making at least one of them worse off. Provided that what happens in this market does not affect anyone other than the participating buyers and sellers, we can say that the equilibrium allocation is Pareto efficient

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