Explain the Difference Between Efficiency and Equity

question 149

Essay

Explain the difference between efficiency and equity.Which of the two is naturally promoted by market forces (under ideal conditions)?

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Definitions:

Increasing Opportunity Costs

The economic concept that as production of a good increases, the opportunity cost of producing an additional unit of that good also increases.

Production Possibilities Schedule

A graphical representation that shows the different combinations of two goods or services that can be produced within a given time period, provided that available resources and technology are static.

Consumer Goods

Goods that are produced for direct consumption by the end user.

Capital Goods

Long-term assets purchased by businesses to produce goods and services.