The main point of the second theorem of welfare economics is that:
A) efficiency is more important than equity.
B) efficiency may be achieved, but equity is not a feasible goal.
C) any attempt to achieve an equitable outcome must occur off the contract curve.
D) any equitable outcome can be achieved by reallocating the resources among the members of a society.

Question

Quizplus · Accepted Answer

The second theorem of welfare economics states that any Pareto efficient allocation can be achieved by some initial distribution of wealth and competitive equilibrium. This implies that by redistributing resources, any desired equitable outcome that is also efficient can be reached, assuming perfect markets and no externalities.

The Main Point of the Second Theorem of Welfare Economics