Allocative Efficiency Is Achieved When

question 186

Multiple Choice

Allocative efficiency is achieved when

• A)goods and services are fairly distributed among consumers in an economy.
• B)firms produce the goods and services that consumers value most.
• C)firms produce goods and services at the lowest cost.
• D)there are no shortages or surpluses in the market.

---

Definitions:

Liquidity

The measure of how easily an asset or security can be converted into ready cash without affecting its market price.

Profitability

A measure of the ability of a company or business unit to generate earnings relative to its revenue, assets, equity, or other financial metrics over a certain period of time.

Price-earnings Ratio

A financial metric that measures a company's market share price relative to its earnings per share, indicating investor sentiment about future earnings.

Times

A financial metric used to compare two quantities or to indicate frequency. In business, it often refers to multiples or ratios used in financial analysis.