Arrow-Debreu Theorem

The Arrow-Debreu Theorem is a fundamental concept in economics that describes how a perfectly competitive market can allocate resources efficiently. It asserts that under certain conditions—like complete information and the absence of market failures—it's possible to reach an equilibrium where supply equals demand for every good in the economy. This means that every individual can maximize their satisfaction and all resources are used optimally. Essentially, it highlights the potential for markets, when functioning well, to create an efficient outcome where no one can be made better off without making someone else worse off.