Read the following passage and answer the item that follows. Your answer to this item should be based on the passage only.

Markets allocate resources efficiently, but they do not, by themselves, guarantee that basic needs are met for those without purchasing power; that is why most functioning democracies pair market economies with some welfare provisions, from public health to unemployment support, funded through taxation.

With reference to the passage, the following assumptions have been made:

1. Markets alone are always sufficient to meet the basic needs of every citizen.

2. Democracies that combine markets with welfare provisions do so partly because markets alone leave some needs unmet.

Which of the above assumptions is/are valid?