Production Efficiency Means That

question 29

Multiple Choice

Production efficiency means that

• A) as few resources as possible are being used in production.
• B) scarcity is no longer a problem.
• C) producing another unit of the good has no opportunity cost.
• D) producing more of one good is possible only if the production of some other good is decreased.

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Definitions:

Allocation

The process of distributing resources, goods, or services according to a specific plan or system.

Productivity

A measure of average output or real output per unit of input. For example, the productivity of labor is determined by dividing real output by hours of work.

Land Taxes

Taxes imposed on property owners based on the value of their land, commonly used by governments as a source of revenue.

Incentive Function

The inducement that an increase in the price of a commodity gives to sellers to make more of it available (and conversely for a decrease in price), and the inducement that an increase in price offers to buyers to purchase smaller quantities (and conversely for a decrease in price).