Consider the following conditions that may or may not apply about a market
(1) There are no externalities in the market.
(2) Demand elasticity and supply elasticity are the same.
(3) The market structure is perfect competition
(4) A subsidy is set to maximize output
The First Welfare Theorem states that the unregulated market is Pareto efficient if which of the
above conditions hold?
a) (2) and (3)
b) (2) and (4)
c) (1) and (4)
d) (1) and (3)
e) (3) and (4)