The second welfare theorem states that any Pareto- optimal allocation:
A)the initial endowment is not relevant for the equilibrium.
B)is equally desirable for the economic agents.
C)can always be attained as a competitive equilibrium.
D)can be attained as a competitive equilibrium under some restrictive conditions.

Question

Quizplus · Accepted Answer

The second welfare theorem states that any Pareto-optimal allocation can be achieved as a competitive equilibrium, but this requires certain conditions such as convex preferences, perfect competition, and the ability to make lump-sum transfers.

The Second Welfare Theorem States That Any Pareto- Optimal Allocation