When a Fixed Stock of Inputs Cannot Be Reallocated Among

question 59

Multiple Choice

When a fixed stock of inputs cannot be reallocated among firms in an economy without reducing the output of at least one of the goods that is produced in the economy, the allocation satisfies:

• A)exchange efficiency.
• B)input efficiency.
• C)substitution efficiency.
• D)Walras' Law.

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Definitions:

Asymmetric Information

Occurs when one party in a transaction has more or superior information compared to another, affecting decision-making.

Moral Hazard

A situation in economics and finance where one party takes more risks because another party bears the cost of those risks.

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A policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident or other vehicle-related damages.

Precautions

Actions taken in advance to prevent potential undesirable outcomes or to minimize risks.