Economic Efficiency Means

question 27

Multiple Choice

Economic efficiency means

• A) the same as technical efficiency.
• B) that all firms within a single competitive industry are producing at the same level of output.
• C) that it is impossible to increase the output of any good without lowering the total value of the output of the economy.
• D) that high-tech methods of production are the most efficient.

---

Definitions:

Variable Overhead Costs

Costs that fluctuate with production volume, such as utilities for manufacturing facilities or materials used in production.

Direct Labor Hours

The aggregate number of hours put in by personnel directly participating in the creation of goods or delivery of services.

Fixed Overhead Costs

Fixed costs that stay the same no matter how much is produced or sold, including items like rent, salaries, and insurance policies.

Operating Capacity

The maximum level of activity that a company can sustain with its current resources and infrastructure without incurring additional costs.