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.
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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.
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