Question

In the Edgeworth production box, the locus of tangency points between isoquants of two industries defines the production contract curve. Which of the following statements about the Second Theorem of Welfare Economics in this context is CORRECT?

A Any point on the production contract curve can be achieved as a competitive equilibrium through lump-sum redistribution of initial factor endowments, without distorting production efficiency
B The Second Theorem applies only when externalities are absent and the contract curve coincides with the diagonal of the Edgeworth box
C Any point on the contract curve is achievable only through tax-subsidy schemes that necessarily distort factor prices
D The Second Theorem guarantees that the competitive equilibrium point on the production contract curve is also Pareto-optimal in consumption
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