A Lesson to Policy Makers from the Theory of Second

question 1

Multiple Choice

A lesson to policy makers from the Theory of Second Best is that:

• A)Care is needed removing any one distortion in the economy, given the possible interaction between various distortions in the economy.
• B)Total surplus will increase if all distortions can be simultaneously eliminated.
• C)The largest market failures need to removed first.
• D)a and B

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