The "theory of the second best" states that
Select the correct response:
- there is always an alternative solution to trade negotiations if the first best is not feasible.
- free trade is the second best way to address a market failure.
- free trade is only the "second best" policy after the optimal tariff.
- government intervention in a market can improve welfare when market failures are present.
Import quotas are less desirable than tariffs when the goal is to restrict trade