Inefficiency Exists in an Economy When a Good Is

question 28

Multiple Choice

Inefficiency exists in an economy when a good is

• A)not being consumed by buyers who value it most highly.
• B)not distributed fairly among buyers.
• C)not produced because buyers do not value it very highly.
• D)being produced with less than all available resources.

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Definitions:

Utility-Maximizing

A principle in economics where consumers aim to achieve the highest level of satisfaction with their choices, subject to their income and the prices of goods and services.

Marginal Utility

Marginal Utility represents the additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.

Diminishing Marginal Utility

A principle stating that as a person increases consumption of a product, there is a decline in the satisfaction or utility they derive from each additional unit.

Utility Maximization

The economic principle that individuals seek to obtain the greatest possible satisfaction from their consumption choices, given their income and prices.