Of all the constant elasticity of substitution social welfare function, only the one with elasticity of infinity will always choose the efficient outcome from a second-best consumption possibility frontier.

Question

Quizplus · Accepted Answer

A CES social welfare function with an elasticity of infinity is equivalent to a utilitarian social welfare function, which always chooses the efficient outcome from a second-best consumption possibility frontier.

Of All the Constant Elasticity of Substitution Social Welfare Function