Each of the following is a challenge that society's would face in trying to use the second welfare theorem to achieve equity without sacrificing efficiency EXCEPT:
A) endowments aren't always easily observable.
B) wealth isn't an endowment.
C) lump-sum transfers distort choices.
D) transfers based on wealth aren't lump-sum transfers.

Question

Quizplus · Accepted Answer

Lump-sum transfers do not distort choices because they do not change the relative prices of goods and services.

Each of the Following Is a Challenge That Society's Would