Two Goods Are Said to Be Allocated Efficiently Between Consumers

question 13

Multiple Choice

Two goods are said to be allocated efficiently between consumers when:

• A)they are divided equally between them.
• B)the marginal rates of substitution between the two goods are the same for both consumers.
• C)further reallocations can make the consumers better off.
• D)the consumers derive the maximum marginal utility from the consumption of both the goods.

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Definitions:

Variable Cost

Expenses that vary in proportion to the volume of goods or services produced in a business.

Opportunity Cost

The forfeiture of potential benefits from other options by selecting a specific one.

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales activities, such as rent, salaries, and insurance.

Variable Costs

Costs that change in proportion to the level of goods or services a company produces.