According to the second welfare theorem
A)The issues of equity and efficiency are tied together
B)The issues of equity and efficiency are separate
C)Equity is unimportant to economists
D)The market also achieves equity for all participants of the economy

Question

Quizplus · Accepted Answer

The second welfare theorem states that under certain conditions, any Pareto-efficient allocation can be achieved through competitive markets regardless of the initial distribution of resources. This means that efficiency can be achieved independently of equity considerations, and thus the issues of equity and efficiency are separate. However, this theorem does not imply that the market achieves equity for all participants of the economy. It only states that efficiency can be achieved through market mechanisms.

According to the Second Welfare Theorem