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.
Answer the following statement true (T) or false (F)
True
Rationale: Second best utility possibility frontiers arise from the fact that redistribution involves deadweight losses. The only outcome that does not entail deadweight loss is then the outcome in which we do not redistribute. Overall consumption is maximized at that outcome -- and thus chosen by a CES social welfare function with infinite elasticity of substitution -- but it will generally not be chosen when the elasticity of substitution is less than that.
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a. True b. False
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a. True b. False Indicate whether the statement is true or false