If a Firm Makes Production Decisions Such That It Achieves

question 14

Multiple Choice

If a firm makes production decisions such that it achieves maximum output from a fixed stock of resources, this means that this firm is

• A) achieving allocative efficiency
• B) earning a positive economic profit
• C) earning a normal profit
• D) technically efficient

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Definitions:

Net Worth

The total value of an individual's or organization's assets minus liabilities.

Consumption

The use of goods and services by households, considered as the end component of economic activity where goods or services are utilized.

Vertical Equity

A principle of taxation that posits taxpayers with higher incomes should pay more in taxes than those with lower incomes, based on the ability to pay.

Tax Burdens

The total amount of taxes paid by an individual or entity, often expressed as a percentage of income or as an absolute amount.