The allocation of resources is not efficient if ?
Correct answer: A. the marginal cost of production does not equal society's marginal benefit
- A. the marginal cost of production does not equal society's marginal benefit
- B. the distribution is inequitable
- C. economic growth is low
- D. unemployment is high
Explanation
Allocative efficiency requires society's marginal benefit from the last unit to equal its marginal cost, so resources cannot be shifted to create a net gain. Inequality, slow growth, and unemployment may be undesirable but do not by themselves define allocative inefficiency.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
The social costs of monopoly power arises because ?
If two firms doing the same thing in the same industry join together, this is known as a ?
The problem posed by a natural monopoly is that it faces a _____ This means that _______?
We cannot say whether one allocation of resources is better than another allocation because ?
An allocation is Pareto-efficient if no reallocation of resources would make some people _______ without making others ________?
A dominant strategy is ?