Explain what is meant by economic efficiency. Does efficiency imply that the fastest production processes or the most powerful equipment must always be used? Explain
What will be an ideal response?
Efficiency involves a situation in which a given output is produced at lowest cost. Consequently, the fastest-operating or most powerful equipment may not always be efficient.
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Within the aggregate demand-aggregate supply framework, monetarists argue that a change in aggregate:
A. Demand will have a large effect on the price level, but a temporary effect on output B. Demand will have a small effect on the price level, but a permanent effect on output C. Demand will have a large effect on the price level and a large effect on output D. Supply will have a large effect on the price level, but a temporary effect on output
In the case of a small country, the effects of a quota and a tariff are (almost) identical if
A. the government allocates import licenses directly to the public using a free lottery system. B. the government allocates licenses for free to importers using a rule or process that involves (almost) no resource cost. C. the government allocates licenses to importers through application and selection procedures that require the use of substantial resources. D. the government auctions off import licenses to the highest bidder.