What is the principle of Pareto efficiency in welfare economics and how does it relate to the concept of market equilibrium?

What the three forms of market efficiency are — weak, semi-strong, strong

Weak: Prices reflect all publicly available information; Semi-strong: Prices reflect all public and private information; Strong: Prices reflect all information, including private

What the Coase theorem says — with zero transaction costs, parties negotiate efficient outcomes

Coase theorem: Zero transaction costs lead to efficient resource allocation through bargaining

What the efficient market hypothesis claims — prices reflect all available information

Efficient Market Hypothesis: Prices incorporate all publicly available information

What the endowment effect causes — you value what you own more than what you don't

The endowment effect leads to overvaluation of owned items compared to identical alternatives

What laissez-faire economics argues — minimal government intervention in markets

Laissez-faire economics argues for limited government involvement in economic activities

What Adam Smith's invisible hand means — self-interest drives collective benefit

Self-interest in free markets leads to societal prosperity