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.

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Definitions:

Variable Input

An input in the production process that can be adjusted in the short term, such as labor or raw materials.

Average Total Cost

The sum of all production costs (both fixed and variable) divided by the total quantity of units manufactured.

Demand

The desire of consumers to purchase goods and services at given prices, which is a fundamental concept in economics determining market dynamics.

Long-Run Average Cost Curve

A graphical representation showing the minimum average cost at which any output level can be produced when all inputs are variable in the long run.