General
What are the advantages of leaving the allocation of a countrys resources to the price mechanism?
The main conditions required are:
1. Either a finite number of agents or goods.
2. No externalities - That is, the consumption of one person should not harm or benefit anyone else.
3. No matter how much a person is consuming, they must be able to be made slightly happier by consuming a bit more of something.
1. Either a finite number of agents or goods.
2. No externalities - That is, the consumption of one person should not harm or benefit anyone else.
3. No matter how much a person is consuming, they must be able to be made slightly happier by consuming a bit more of something.
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