How does the text define economic efficiency? Is this an absolute or a relative definition? Would another type of definition be preferable? Why or why not?
The text defines economic efficiency contextually, for example, within the context of a particular state of affairs. It is efficient to undertake activities that generate additional benefits in excess of costs. Similarly, it is inefficient if an action generates costs that exceed benefits. This relative definition is acceptable. Since economic thinking is marginal thinking, efficiency always must be defined in relative terms. An absolute definition does not appear possible.
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Profit per unit of output is
a. price minus average total cost b. marginal revenue minus marginal cost c. average total cost minus average variable cost d. total revenue minus total cost e. demand minus average variable cost
Which of the following determines how much money an individual will decide to hold?
a. Investment spending b. Income taxes c. The price level d. The supply of money e. Real GDP