Economic Efficiency Is the Primary Guide in Answering Which of the Fundamental

question 33

Multiple Choice

Economic efficiency is the primary guide in answering which of the fundamental questions in a market economy?

• A) What will be produced?
• B) How is the output to be produced?
• C) How can the system accommodate change?
• D) Who is to receive the output?

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Definitions:

Excess Demand

A situation where the quantity demanded of a good exceeds the quantity supplied at a particular price, leading to a shortage.

Supply Function

A mathematical function that illustrates the quantity of a good that producers are willing and able to sell at different price levels.

Demand Function

A mathematical expression showing the relationship between the quantity demanded of a good and its price, along with other determinants of demand like income.

Quantity Tax

A tax levied on the quantity of goods sold, not on the value of sales.