When Production Efficiency Does NOT Occur, I

question 113

Multiple Choice

When production efficiency does NOT occur, i. an economy is producing at a point within its PPF.
Ii. there are unemployed resources.
Iii. allocative efficiency can not occur.

• A)i only
• B)i and ii
• C)iii only
• D)i and iii
• E)i, ii, and iii

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Definitions:

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, or insurance expenses.

Maximizing Profits

The process of increasing the difference between revenue and costs to achieve the highest possible financial gain.

Economic Profit

The surplus remaining after total costs are subtracted from total revenue, considering both explicit and implicit costs.

Zero Profit

A situation where a firm's total revenues are exactly equal to its total costs, leading to no net gain or loss.