1.Which of the following statements is true?

I.In a first-best world, import-competing firms that were struggling to stay in business would be allowed to go out of business and workers would find jobs in other industries.

II.In a second-best world, the most efficient way for government to correct for workers being displaced when industries die being unable to find jobs in the resulting congested labor markets is to provide subsidies for those workers to move to areas where there are jobs.

III.In a second-best world, if workers do not have the skills for new jobs after they lose their jobs in dying import-competing industries, the most efficient government policy would be subsidies to pay for retraining those displaced workers.

a.I and II

b.I and III

c.II and III

d.I, II, and III