Allocative Efficiency, Productive Efficiency, and Equality quiz #1 Flashcards
Allocative Efficiency, Productive Efficiency, and Equality quiz #1
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What is the maximum utilization a resource can achieve in terms of efficiency? The maximum utilization is achieved when resources are used to their fullest potential, producing on the production possibilities frontier, which represents productive efficiency. Which of the following best describes how goods and services should be produced to achieve efficiency? Goods and services should be produced in a way that maximizes output at the lowest possible cost, reflecting productive efficiency. Which of the following is not a factor in determining efficiency in production? Fairness or equality is not a factor in efficiency; efficiency focuses on maximizing output from scarce resources. Which of the following is likely to result in allocative inefficiency? Producing a mix of goods and services that does not match consumer preferences leads to allocative inefficiency. Which of the following would further the economic goal of efficiency? Allocating resources to produce the mix of goods and services most desired by consumers furthers economic efficiency. Which of the following best describes the virtue of efficiency in economics? Efficiency ensures society gets the maximum benefit from its scarce resources. Which of the following is characteristic of a lean production layout? A lean production layout minimizes waste by eliminating anything not essential to the product or process. Which describes the fairness–efficiency trade-off in economics? The fairness–efficiency trade-off refers to balancing the fair distribution of resources (equality) with maximizing output (efficiency). Which of the following statements about utilization of a resource is true? Utilization is maximized when resources are used efficiently, producing on the production possibilities frontier. What is the reason behind why monopolies are allocatively inefficient? Monopolies are allocatively inefficient because they do not produce the mix of goods and services that matches consumer preferences, often restricting output and raising prices. In which of the following cases is productive efficiency improved? Productive efficiency is improved when output is increased without increasing costs, or when the same output is produced at a lower cost. How are resources allocated efficiently in an economy? Resources are allocated efficiently when they are used to produce the mix of goods and services most desired by consumers. The optimal use of a resource takes place when which condition is met? Optimal use occurs when resources are allocated to maximize total benefit, producing at the point of allocative efficiency. Which scenario exemplifies the concept of efficiency versus effectiveness in time usage? Completing a task quickly with minimal resources (efficiency) versus achieving the desired outcome regardless of resource use (effectiveness). Efficiency is producing output at the lowest possible average total cost of production. True or false? True. This describes productive efficiency. Doing something at the lowest possible cost is known as what type of efficiency? Productive efficiency. A perfectly competitive industry is said to be efficient because: It produces goods at the lowest possible cost and allocates resources according to consumer preferences. The regulated price is allocatively efficient when: It matches the price consumers are willing to pay with the cost of production, reflecting consumer preferences. The oligopolistic industry is not allocatively efficient because: It may restrict output and set prices above the level that matches consumer preferences, leading to a misallocation of resources. What is an example of an allocational boundary in economics? An allocational boundary is the point on the production possibilities curve where the mix of goods produced matches consumer preferences. Are real-world efficiencies generally very high, in the 90 percent range? No, real-world efficiencies are often lower due to factors like market imperfections and resource constraints. What matters most in determining the efficient distribution of production over the world? Consumer preferences and the ability to produce goods at the lowest cost matter most for efficient distribution. The optimal allocation of resources occurs when: Resources are used to produce the mix of goods and services most desired by society, achieving allocative efficiency. In determining the optimal level of output, a firm should aim for the point where: Marginal cost equals marginal benefit, reflecting allocative efficiency. The property of society getting the most it can from its scarce resources is called: Efficiency. Which of the following will be accomplished by efficient allocations of the factors of production? Maximizing total output and benefit from scarce resources. Referring to the graph, which point(s) is/are considered allocatively efficient? The point(s) on the production possibilities curve that reflect consumer preferences are allocatively efficient. The production of a good or service in the least costly way is known as ______ efficiency. Productive efficiency. Efficiency in a market is achieved when: Resources are allocated to produce the mix of goods and services most desired by consumers at the lowest cost. Economic efficiency in a competitive market is achieved when: Goods are produced at the lowest cost and allocated according to consumer preferences. Prices usually allocate resources efficiently because they allocate: Resources to their most valued uses based on consumer demand. An economy's production of two goods is efficient if: It is operating on the production possibilities frontier, maximizing output from available resources. Productive efficiency requires that goods be produced: At the lowest possible cost using available resources. The optimal allocation of resources is found when: The mix of goods produced matches what consumers most desire, achieving allocative efficiency. Allocative efficiency occurs when: Resources are used to produce the mix of goods and services most preferred by society. Economic efficiency requires: Maximizing output from scarce resources and producing the right mix of goods for consumers. Perfect competition achieves allocative efficiency because the market price is: Set where supply equals demand, reflecting consumer preferences. Allocative efficiency occurs when: The mix of goods and services produced matches what consumers value most. In order to satisfy as many wants as possible, it is necessary to achieve allocative efficiency. True or false? True. Allocative efficiency ensures resources are used to meet the most valued wants. An efficient allocation is one that: Maximizes total benefit from scarce resources and matches consumer preferences.
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