Which of the following statements best expresses why economic efficiency should be society's first goal?
A. Since the consensus on what is a fair distribution of goods is impossible, efficiency is the next best goal.
B. Efficiency gives the poor an incentive to improve their economic status.
C. Efficiency maximizes total economic surplus and thereby allows other goals to be more easily achieved.
D. People are not really concerned about the problems of the poor, so government must address them instead.
Answer: C
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If the Federal Reserve eliminated all reserve requirements the most likely result would be
A) a large number of depository institution failures because they would not have enough liquidity. B) the Federal reserve would be unable to control the money supply. C) banks would no longer be able to clear checks at the Federal Reserve because there would be no required reserves. D) the size of the money multiplier might fluctuate considerably making the Federal Reserve's job of controlling the money supply more difficult.
A barter economy is one in which:
a. money serves as a medium of exchange. b. only precious metals are accepted as money. c. goods are traded directly for other goods. d. paper money is backed by gold.
If average variable cost exceeds average fixed cost at a particular level of output: a. Profits must be positive
b. That fact is meaningless for deciding the quantity of output to produce. c. It is more likely that the output level is low relative to the designed capacity of the production facility than that the output level is low relative to the designed capacity of the production facility. d. Both b and c. are likely true.
When the government is running a budget surplus,
a. the demand for loanable funds includes only business investment spending b. the supply of loanable funds includes only business investment spending c. the loanable funds market cannot be in equilibrium d. the supply of loanable funds includes only household saving e. there will be an excess supply of loanable funds