When Economists Say an Activity Is Consistent with Economic Efficiency

question 166

Multiple Choice

When economists say an activity is consistent with economic efficiency, they mean

• A) a majority of citizens favor the activity.
• B) the benefits that result from the activity exceed the costs.
• C) the number of people who gain from the activity exceeds the number on whom costs are imposed.
• D) the costs that result from the activity exceed the benefits.

---

Definitions:

Safety Inventory

Extra inventory held to guard against uncertainty in the demand or supply chain, ensuring that shortages are minimized.

Demand Uncertainty

The lack of predictability in consumer demand for products or services, making inventory or production planning challenging.

Coefficient Of Variation

A statistical measure of the relative dispersion of data points in a data series around the mean, expressed as a percentage.

Safety Inventories

Additional stocks held beyond expected demand to mitigate the risk of stockouts due to demand and supply variability.