To Achieve Allocative Efficiency,one Must Compare the

question 260

Multiple Choice

To achieve allocative efficiency,one must compare the

• A) marginal cost of a good to its opportunity cost.
• B) opportunity cost to the attainable point on the production possibilities frontier.
• C) marginal benefit of a good to its marginal cost.
• D) marginal cost to the production efficiency cost.
• E) point of production efficiency to the point of allocative efficiency.

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Definitions:

Market Rate Of Interest

The prevailing interest rate available in the marketplace for investments, loans, and savings, varying based on demand, supply, and monetary policy.

Normal Rate Of Return

The average or expected return on investment typical for a given industry or sector, accounting for risk.

Economic Profit

The net difference in a company's total earnings and all its costs, encompassing both overt and hidden expenses.

Depreciating Capital

Assets that lose value over time due to use, wear and tear, or technological obsolescence, impacting a firm's financial statements and tax liabilities.