The second fundamental theorem of welfare economics states that
A) under certain conditions, a competitive equilibrium is Pareto optimal.
B) a competitive equilibrium is always Pareto optimal.
C) under certain conditions, a Pareto optimum is a competitive equilibrium.
D) a Pareto optimum is always a competitive equilibrium.
C
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In the specificfactors model, suppose that a country has a comparative advantage in manufacturing output. Will landowners be better or worse off following the opening of trade with other countries?
a. They will be better off. b. They will be worse off. c. They may be better off or worse off because the real rental on capital in terms of the agricultural good rises and the real rental in terms of the manufactured good falls. d. They may be better off or worse off because the real rental on capital in terms of the manufactured good rises and the real rental in terms of the agricultural good falls.
Refer to Table 19-5. The value of each automobile in gross domestic product equals
A) $7,000. B) $15,000. C) $18,000. D) $25,000.