Economics · Welfare Economics

Consider these statements about the Second Fundamental Theorem of Welfare Economics: A. Any Pareto efficient allocation can be achieved as a competitive equilibrium if initial endowments are appropriately redistributed via lump-sum transfers. B. The Second Theorem requires both convex preferences and convex production sets. C. The Second Theorem implies that distributional concerns (equity) can be separated from efficiency concerns — society can pick the desired distribution first, then let markets achieve efficiency. D. The Second Theorem holds even with non-convex preferences, as long as production is convex. E. The Second Theorem justifies the use of distortionary taxes rather than lump-sum taxes for redistribution. Which statements are CORRECT?