Which of the following comparisons of efficiency and equity is correct?
a) Efficiency deals with the size of the economic pie and equity deals with how fairly the pie is sliced.
b) Equity can be judged on positive grounds, whereas efficiency requires normative judgments.
c) Efficiency is more difficult to evaluate than equity.
d) Equity and efficiency are both maximized in a society when total surplus is maximized.
Ans: a) Efficiency deals with the size of the economic pie and equity deals with how fairly the pie is sliced.
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A lower real interest rate ________ saving and ________ consumption spending.
A. increases; increases B. does not change; does not change C. increases; decreases D. decreases; increases
As the Federal Reserve ________ bonds, interest rates rise and the price of bonds ________
A) sells; falls B) buys; rises C) sells; rises D) buys; falls
When the marginal product equals the average product, the
A) average product curve is downward sloping. B) average product curve is upward sloping. C) marginal product is at its maximum. D) average product is at its maximum.
Opportunity cost can best be defined as the
A. value of what must be given up in order to acquire an item. B. money cost to the buyer to acquire a good or service. C. total value of all the other items that otherwise could be acquired. D. cost to the seller to produce an item. E. time cost to obtain the money to buy an item.