The Arrow-Debreu Model is a fundamental concept in economic theory that describes how markets can achieve equilibrium through the allocation of resources. Developed by economists Kenneth Arrow and Gérard Debreu, the model assumes that consumers and firms make decisions based on their preferences and available information, leading to an efficient distribution of goods and services in a competitive market. In this model, every possible state of the world is accounted for, allowing for the creation of a complete set of markets for all goods and services. This theoretical framework helps economists understand how prices are determined and how markets can function optimally under certain conditions, providing insights into welfare economics and general equilibrium theory.