Allocative Efficiency Occurs in Markets When _____

question 14

Multiple Choice

Allocative efficiency occurs in markets when _____

• A)the marginal benefit that consumers attach to the last unit purchased equals the opportunity cost of the resources employed to produce that unit.
• B)the marginal benefit that consumers attach to the last unit purchased exceeds the opportunity cost of the resources employed to produce that unit.
• C)goods are produced at the minimum of average total cost.
• D)goods are distributed evenly among consumers.
• E)government establishes price ceilings below the market price.

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Definitions:

Junk Bonds

High-risk, high-interest bonds issued by companies or entities with lower credit ratings, considered to be below investment grade.

Interest Rates

The cost of borrowing money or the return earned from lending money, usually expressed as a percentage.

Solid Companies

Firms with strong financial health, stable earnings, and a good history of consistent performance.

Bond Ratings

Assessments by rating agencies that evaluate the creditworthiness of a bond issuer and the likelihood that it will meet its obligations.