Asked by Brian Doherty on Jul 21, 2024
Verified
Suppose MRS is not the same across all consumers. In this case, the economic outcome is not fully efficient because:
A) exchange is inefficient.
B) the use of inputs in production is inefficient.
C) the mix of outputs in inefficient.
D) none of the above
Economic Outcome
The result or consequence of economic activities and policies on an economy's overall condition.
Marginal Rate Of Substitution
The speed at which a consumer is able to forfeit a certain quantity of one product in favor of another product, whilst retaining an equivalent level of satisfaction.
Efficiency
Efficiency in an economic context refers to the optimal production and allocation of resources to maximize the satisfaction of needs and wants with minimal waste.
- Utilize the theory of economic optimization, involving efficiency in both inputs and outputs, in differing market contexts.
Verified Answer
SM
sushmi maharjanJul 24, 2024
Final Answer :
A
Explanation :
When the Marginal Rate of Substitution (MRS) is not the same across all consumers, it indicates that there is an inefficiency in exchange. This is because if one consumer values a good more than another, there is potential for welfare-enhancing trade that has not been exploited.
Learning Objectives
- Utilize the theory of economic optimization, involving efficiency in both inputs and outputs, in differing market contexts.