The Second Welfare Theorem States That

question 96

Multiple Choice

The Second Welfare Theorem states that:

• A) perfectly competitive markets, if Pareto-efficient, are equitable.
• B) Pareto efficiency implies that input allocations are socially desirable.
• C) Pareto efficiency cannot occur if resources are not equitably allocated.
• D) any Pareto-efficient allocation can be achieved in a perfectly competitive market by adjusting the initial allocations of goods.

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Definitions:

Standard Deviation

An index quantifying how much data points deviate or scatter from their average.

Mean

The average of a set of numbers, calculated by adding them together and then dividing by the number of numbers.

Value

The degree of importance, worth, or usefulness of something.

Plowback Ratio

The proportion of earnings retained by a company after dividends have been paid, for reinvestment in its core business.