If Resources Are Allocated Efficiently in a Market Economy

question 45

Multiple Choice

If resources are allocated efficiently in a market economy:

• A) the way final goods and services are distributed does not matter to society.
• B) the outcome may not be socially desirable if distributional issues are also important.
• C) the outcome will always be socially desirable.
• D) each person's utility is maximized, and so the result is Pareto optimal.

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Definitions:

Outside Supplier

An external entity that provides goods or services to a company, not part of the company’s own operations.

Idle Capacity

The portion of a manufacturing or service facility's resources that is not currently being utilized to its full potential.

Transfer Price

The price one subunit of a company charges for a product or service supplied to another subunit of the same organization.

Connector Division

A specialized department within a company focused on the production or distribution of connector components for various applications.