#1. The idea of efficiency often arises when measuring a society\'s well-being.
ID: 1210871 • Letter: #
Question
#1. The idea of efficiency often arises when measuring a society's well-being. There are two kinds of efficiency: productive efficiency and allocative efficiency.
What can the government do to promote allocative efficiency?
A. Impose a minimum of interference in the market, thus enabling the people who are willing to pay the most for a given good or service to obtain it.
B. Allocate resources so that all types of goods and services are produced in the same amount.
C. Allocate all resources to maximize the production of the one product most desired by the society.
D. Take responsibility for distributing resources equally among the rich and the poor, regardless of people's preferences.
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An isoquant is a curve showing all combinations of labor and capital that can produce the same quantity of output
# It's possible that point G can produce just as much output as point D (T/F)
#The slope of the line tangent to the isoquant at point F is flatter than that at point G (T/F)
#The quantity of output produced at point H must be less than that at point D (T/F)
Explanation / Answer
1. A. Impose a minimum of interference in the market, thus enabling the people who are willing to pay the most for a given good or service to obtain it.
2. (i) False as D requires more units of capital and labor and produces more output compared to G.
(ii) True. Flatter line has smaller slope and steeper line has larger slope.
(iii) True because higher isoquant produces higher units of output.
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