A lesson to policy makers from the Theory of Second Best is that:
A)Care is needed removing any one distortion in the economy, given the possible interaction between various distortions in the economy.
B)Total surplus will increase if all distortions can be simultaneously eliminated.
C)The largest market failures need to removed first.
D)a and B

Question

Quizplus · Accepted Answer

The Theory of Second Best suggests that removing a single distortion in the presence of other distortions may not lead to an improvement in economic efficiency, and that total surplus can increase if all distortions are eliminated simultaneously. This highlights the complexity of economic systems and the need for careful policy analysis.

A Lesson to Policy Makers from the Theory of Second