Which of the Following Statements About the Relationship Between Efficiency

question 138

Multiple Choice

Which of the following statements about the relationship between efficiency and effectiveness is most accurate?

• A)The relationship between effectiveness and efficiency is subtle and complex. Over the long haul, becoming more effective may also allow a firm to become more efficient.
• B)Efficiency and effectiveness are just two terms for the same basic concept.
• C)While both effectiveness and efficiency are worthwhile objectives, achieving efficiency is more crucial to a firm's success than effectiveness.
• D)In the long run, a firm must choose either to be effective or to be efficient. The two goals are incompatible, meaning that there is no way to consistently achieve both of these goals.

Recognize the characteristics and implications of increasing-cost, decreasing-cost, and constant-cost industries on the industry's supply curve and market prices.

Interpret the impact of external and internal economies and diseconomies of scale on long-run average costs.

Describe the adjustment processes in perfectly competitive markets towards long-run equilibrium under different cost conditions.

Analyze the effects of demand changes on industry growth, prices, and firm entry or exit in the long run.

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Definitions:

Short Run

The short run is a period in economics during which at least one input, such as plant size or capital, is fixed, limiting the business's ability to adjust production levels fully.

Physical Capital

Physical capital encompasses the machinery, equipment, and infrastructure a business uses to produce goods or services, distinct from financial capital or human skills.

Average Total Cost

The total cost of production divided by the number of goods produced, accounting for both fixed and variable costs.

Output

The total amount of goods or services produced by a firm, industry, or economy within a specific period.