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.

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Definitions:

Financial Capital Maintenance

A concept where profit is only recognized if the financial amount of a company's net assets at the end of the period exceeds the financial amount at the beginning, excluding any distributions to, or contributions from, owners during the period.

Net Income

The amount of earnings left over after all expenses, including taxes and cost of goods sold, have been subtracted from total revenue, indicating the financial success or profitability of a company over a specified period.

Extraordinary Items

Events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence, significantly impacting a company's financial position.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the IFRS Foundation and the International Accounting Standards Board to ensure global consistency and transparency in financial reporting.