Each of the following is a challenge that society's would face in trying to use the second welfare theorem to achieve equity without sacrificing efficiency EXCEPT:
A. endowments aren't always easily observable.
B. wealth isn't an endowment.
C. lump-sum transfers distort choices.
D. transfers based on wealth aren't lump-sum transfers.
C. lump-sum transfers distort choices.
You might also like to view...
Explain the purpose of the following figure
What will be an ideal response?
Transactions costs are defined to be the:
A. costs a buyer or seller incurs to make a transaction take place. B. taxes they pay when purchasing a good or service. C. fees they are charged if they purchase a good or service on credit. D. costs a buyer faces if they re-sell a good or service.
A banking panic is an episode in which:
A. depositors, afraid of increasing interest rates, attempt to engage in discount-window borrowing at the Federal Reserve. B. depositors, spurred by news or rumors of possible bankruptcy of one bank, rush to withdraw deposits from the banking system. C. commercial banks, concerned about high interest rates, rush to borrow at the Federal Reserve discount rate. D. commercial banks, fearing Federal Reserve sanctions, unwillingly participate in open-market operations.
A perfectly elastic supply curve is
A. a straight line that crosses the horizontal axis. B. a vertical straight line. C. a straight line coming out of the origin. D. a horizontal straight line.