Figure 19-3 Illustrates the Determination of an Efficient Output Mix

question 28

Multiple Choice

Figure 19-3 illustrates the determination of an efficient output mix in a two good economy.The output combination is represented by point Z and the consumption point of a representative consumer is W.The slope of the line zz represents the marginal rate of transformation [MRT].
-Refer to Figure 19-3.Based on the information given in the figure,we can conclude that:

• A)the allocation of inputs is inefficient.
• B)the allocation of the given output among the two consumers is efficient.
• C)the output mix between goods X and Y is inefficient.
• D)a redistribution of the goods will make both the consumers worse off.

---

Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level.

Demand P

The desire and ability of consumers to purchase a good or service at a particular price, often represented as a demand curve.

Consumer Surplus

The discrepancy in the total money consumers are willing to invest in a good or service compared to what they really pay.

Market Demand Curve

A graphical representation showing the relationship between the price of a good and the total quantity demanded by all consumers in the market.