Comment on the Following: "The Second Welfare Theorem Says That

question 11

Essay

Comment on the following: "The second welfare theorem says that we can get any efficient allocation to be an equilibrium allocation.If endowments are inequitably distributed in an economy, we can therefore redistribute among people and still get an efficient outcome.As a result, there is no policy trade-off between equity and efficiency."

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Definitions:

Trade Surplus

The result when a country engaged in trade exports more than it imports, also called positive trade balance.

International Product Life Cycle

A theory suggesting that a product's sales and popularity will vary in different international markets through various stages of its life cycle.

Maturity Phase

The stage in a product's lifecycle or a company's growth where sales growth slows or stabilizes as the market becomes saturated.

Capital Intensity

The amount of fixed or real capital present in relation to other factors of production, particularly labor.