What do we mean by efficient production?
What will be an ideal response?
Efficient production implies that no inputs are wasted. If a given number of output is efficiently produced it is not possible to produce the same amount with less inputs.
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A newspaper story on the effect of higher milk prices on the market for ice cream contained the following:
"As a result [of the increase in milk prices], retail prices for ice cream are up 4 percent from last year. . . . And ice cream consumption is down 3 percent." Source: John Curran, "Ice Cream, They Scream: Milk Fat Costs Drive Up Ice Cream Prices," Associated Press, July 23, 2001. Based on the information given, what is the price elasticity of demand for ice cream? A) 12% B) 0.75 (in absolute value) C) 1.33 (in absolute value) D) We do not have enough information to calculate the elasticity.
All of the following statements are correct EXCEPT:
A. There are unemployed people even during expansions. B. Economies grow steadily over time. C. A trade surplus exists when a country exports more than it imports. D. Unemployment increases during recessions.