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Must there be a tradeoff between efficiency and equity? Explain using the second fundamental theorem and...

Must there be a tradeoff between efficiency and equity? Explain using the second fundamental theorem and why it is unlikely to be relevant for policymakers.

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An equity-efficiency tradeoff exists whenever activity in a given market may simultaneously increase productive efficiency and decrease distributive equity, or vice versa. This may be due to transaction costs or other distorting effects of involuntary redistribution within a population, which might prevent maximum production possibility frontier. Alternatively, increase in production efficiency might incidentally increase circumstantial inequality.

The policy makers and those concerned with the unequal distribution of economic resources may advocate public policy to limit productive efficiency, hoping to generate a more equitable outcome.

Read more: Equity-Efficiency Tradeoff https://www.investopedia.com/terms/e/equityefficiencytradeoff.asp#ixzz58Erx4vly
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