Which of the Following Describes a Difference Between Allocative Efficiency

question 226

Multiple Choice

Which of the following describes a difference between allocative efficiency and productive efficiency in a perfectly competitive market?

• A)Allocative efficiency is achieved only in the long run. Productive efficiency is achieved only in the short run.
• B)Allocative efficiency is achieved only in the long run. Productive efficiency is achieved in the short run and the long run.
• C)Allocative efficiency is achieved only in the short run. Productive efficiency is achieved only in the long run.
• D)Allocative efficiency is achieved in the short run and the long run. Productive efficiency is achieved only in the long run.

---

Definitions:

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Income Statement

A financial document that provides a summary of a company's revenues, expenses, and profits over a specific period, detailing its ability to generate earnings.

Leverage

The use of various financial instruments or borrowed capital, such as debt, to increase the potential return of an investment.

Return On Stockholders' Equity

A measure of a company's profitability that calculates how many dollars of profit are generated for each dollar of shareholders' equity.