What Is Productive Efficiency

question 170

Multiple Choice

What is productive efficiency?

• A) A situation in which resources are allocated to their highest-profit use.
• B) A situation in which resources are allocated such that goods can be produced at their lowest possible average cost.
• C) A situation in which resources are allocated such that the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it.
• D) A situation in which firms produce as much as possible.

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Definitions:

Fixed Fee

A pricing structure where the cost of a service or project is agreed upon upfront and not subject to change based on time or resources used.

Cost Reimbursable Contract

A type of contract where the buyer reimburses the seller for all legitimate costs incurred plus a fee representing profit.

Profit

The financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in maintaining the business.

Punch List

A document listing work that does not conform to contract specifications, needing completion or correction before project finalization.