Why Is It Difficult to Compare Two Efficient Points and Decide

question 47

Multiple Choice

Why is it difficult to compare two efficient points and decide which one is better?

• A)The Pareto efficiency criterion cannot be applied to more than one allocation.
• B)Interpersonal comparisons cannot be made scientifically.
• C)The criteria for efficiency are subjective.
• D)There is no difference between various efficient allocations.

Analyze how changes in output affect variable costs and total costs.

Recognize the importance of marginal cost in optimizing economic activity levels.

Determine the role and impact of fixed costs on total production costs.

Understand the concepts and calculations related to average cost, average variable cost, and their relevance to economic decisions.

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Definitions:

Absolute Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than any other production entity.

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.

Production Relationships

Production relationships refer to the connections and interactions between inputs used in the production process and the resulting outputs.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two or more goods, given a set of inputs.