Multiple Choice QuestionWhen productive efficiency and allocative efficiency are not achieved in a market, it is called a(n) Blank______.Multiple choice question.productivity lossbad businessefficiency lossrevenue loss
Question
Multiple Choice QuestionWhen productive efficiency and allocative efficiency are not achieved in a market, it is called a(n) Blank______.Multiple choice question.productivity lossbad businessefficiency lossrevenue loss
Solution
The correct answer is "efficiency loss". When a market does not achieve productive efficiency and allocative efficiency, it is referred to as an efficiency loss. Productive efficiency refers to a situation where the optimal combination of inputs results in the maximum amount of output. Allocative efficiency, on the other hand, occurs when the goods and services are distributed according to consumer preferences. Therefore, if these are not achieved, the market suffers an efficiency loss.
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