Asked by Nicholas Villar on May 21, 2024
Verified
Suppose MRTS is not the same across all producers. 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 of economic activities, often measured by metrics such as GDP growth, unemployment rates, and inflation.
Marginal Rate Of Technical Substitution
The rate at which one input can be reduced per additional unit of another input, while maintaining the same level of output.
Efficiency
The optimal use of resources to achieve the desired ends, minimizing waste and maximizing output.
- Apply the notion of economic efficacy, involving the efficient use of inputs and outputs, within diverse market environments.
Verified Answer
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Final Answer :
B
Explanation :
If MRTS (marginal rate of technical substitution) is not the same across all producers, then some producers are using inputs in a less efficient way than others. This means that the use of inputs in production is inefficient, which can lead to higher costs for these producers and potential deadweight loss for the economy as a whole.
Learning Objectives
- Apply the notion of economic efficacy, involving the efficient use of inputs and outputs, within diverse market environments.