Market Efficiency pt2 Flashcards
1
Q
What does market efficiency mean in economics?
A
Market efficiency means producing the goods that society wants at the lowest possible cost.
2
Q
What does it mean if an economic outcome is inefficient?
A
It means total wellbeing in society can be improved by reallocating resources.
2
Q
Define “marginal analysis” in economic terms.
A
Marginal analysis involves calculating the additional (marginal) benefit compared to the marginal cost of a unit increase in activity.
3
Q
What does “MC” stand for in marginal analysis?
A
MC stands for “Marginal Cost,” the cost of producing one additional unit of a product or service.
3
Q
What does “MB” stand for in marginal analysis?
A
MB stands for “Marginal Benefit,” the additional benefit from a one-unit increase in an activity.
