Of All the Constant Elasticity of Substitution Social Welfare Function

question 13

True/False

Of all the constant elasticity of substitution social welfare function, only the one with elasticity of infinity will always choose the efficient outcome from a second-best consumption possibility frontier.

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Definitions:

Long-term Bonds

are bonds that mature over a period typically longer than ten years, offering a fixed interest rate over their life span.

Systematic Risks

The danger present in the whole market or a specific market segment, referred to as market risk, is unavoidable even with diversification.

Unsystematic Risks

The portion of risk in an investment that is attributable to the specific circumstances of an individual company or industry.

Efficient Frontier

A concept in portfolio theory where an investment portfolio is said to be efficient if it offers the highest expected return for a given level of risk.