Suppose the Conditions of the First Welfare Theorem Hold

question 12

True/False

Suppose the conditions of the first welfare theorem hold.If the government redistributes income prior to production and trade occurring, the market outcome (resulting from production and trade) will be efficient so long as no deadweight loss is produced in the levying of redistributive taxation.

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Definitions:

Straight-line Depreciation

A method of calculating the depreciation of an asset evenly over its useful life.

Single Category Average Cost Method

A method for calculating the cost basis of mutual funds, ETFs, or stocks for tax purposes, where all shares are considered to have the same average cost.

Long-term Loss

A loss realized on the sale or exchange of a capital asset held for more than one year.

Gift Tax

A tax on the transfer of assets or money from one person to another without receiving something of equal value in return, in excess of annual and lifetime exemptions.