One consequence of the second welfare theorem is the fact that the allocation of goods achieved through competitive markets:
A) is always Pareto efficient.
B) can be extremely inequitable.
C) satisfies the conditions of egalitarianism.
D) is free of market failures.

Question

Quizplus · Accepted Answer

The second welfare theorem states that any Pareto efficient allocation can be achieved by a competitive market given appropriate redistribution of initial endowments. However, this does not guarantee equity, meaning the allocation can be inequitable.

One Consequence of the Second Welfare Theorem Is the Fact