Which of the following statements best describes allocative efficiency?
a. As additional increments of resources are added to producing a good or service, the marginal benefit from those additional increments will decline.
b. when it is impossible to produce more of one good (or service) without decreasing the quantity produced of another good (or service)
c. when a country can produce a good at a lower cost in terms of other goods; or, when a country has a lower opportunity cost of production
d. when the mix of goods being produced represents the mix that society most desires
d. when the mix of goods being produced represents the mix that society most desires
Allocative efficiency describes when the mix of goods being produced represents the mix that society most desires.
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Other things constant, which case would tend to reflect the highest elasticity of demand for eggs?
A) A restaurant that spends 1% of their budget on eggs B) A restaurant that spends 2% of their budget on eggs C) A restaurant that spends 5% of their budget on eggs D) The question can't be answered without information on the price of eggs.
Under a flexible exchange system, which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?
a. an acceleration in the nation's inflation rate b. a balance of trade deficit c. a current account deficit d. a decline in the domestic inflation rate