Which of the following statements is true about productive and allocative efficiency?
A. Realizing allocative efficiency implies that productive efficiency has been realized.
B. Productive efficiency can only occur if there is also allocative efficiency.
C. Society can achieve either productive efficiency or allocative efficiency, but not both
simultaneously.
D. Productive efficiency and allocative efficiency can only occur together; neither can occur
without the other.
Answer: A
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Which of the following is the best example of a normative question?
A. Will increasing the money supply affect interest rates? B. How does the market for corn work? C. Will the redistribution of income make society better off? D. How do prices affect the market for coffee?
Suppose a policy change will generate $100,000 of benefits for low-income families and $120,000 of costs for high-income families. This change can best be described as
A. Pareto efficient. B. equitable. C. potentially efficient. D. inefficient.