A situation in which an economy is using its resources to produce the best combination of goods and services to satisfy consumer desires is called

Question

BlackTom AI · Accepted Answer

The question asks for the term that describes a situation where an economy uses its resources to produce the best combination of goods and services to satisfy consumer desires.
Option a: allocative efficiency. This is the idea that resources are directed toward the mix of goods and services that consumers value most, i.e., where the last unit of output provides the greatest net benefit to society. This matches the definition given in the prompt.
Option b: cost efficiency. This phrase would imply minimizing costs for a given level of output, focusing on expenditures rather than on meeting consumer desires or the overall mix of goods. It does not capture the notion of satisfying consumer wants with the right combination of outputs.
Option c: productive efficiency. This concerns producing goods and services at the lowest possible cost given the current technology and resources, or equivalently, producing on the production possibilities frontier. It emphasizes the quantity of output and input use, not the specific mix that satisfies preferences.
Option d: technical efficiency. This is typically about using the fewest inputs to produce a given output, or maximizing output with a given set of inputs. It is a component of productive efficiency and again focuses on production methods rather than the allocation across different goods that best satisfies demand.
Together, these distinctions show that the statement in the prompt aligns with allocative efficiency, while the other options describe different production and cost concepts that do not address the matching of output mixes to consumer desires.

A situation in which an economy is using its resources to produce the best combination of goods and services to satisfy consumer desires is called

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A situation in which an economy is using its resources to produce the best combination of goods and services to satisfy consumer desires is called

View Explanation

Log in for full answers

Similar Questions

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The following questions refer to the monopoly graph below, where MC = marginal cost, ATC = average total cost, D = demand, and MR = marginal revenue. Which Q and P represents allocative efficiency?

Imperfectly competitive markets do not achieve allocative efficiency because profit maximization for each firm occurs when which of the following is true?

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