Which of the following statements is FALSE regarding economic efficiency? A. Efficient outcomes have the possibility...

Which of the following statements is FALSE regarding economic efficiency?

A. Efficient outcomes have the possibility of making everyone better off.

B. The most efficient outcome is the one with the greatest economic surplus.

C. Efficient outcomes will not make everyone happy.

D. If it is efficient, it is also equitable.

Solutions

Expert Solution

Economic efficiency implies betterment and oimprovement. It reduces the wastage while ditribution of resources and outcomes. Thus an efficient economy is always for betterment and equality for the others.
Hence the wrong statement regarding efficiency is (c)

Reason behind other option not choosen:
(a) The main target of efficiency is to increase the economic betterment. It makes every individual better off. The statement is TRUE for economic efficiency thus not choose.

(b) Due to efficiency, surplus and welfare both increases. Because both consumer and producre surplus increases. The statement is TRUE for economic efficiency thus not choose.

(d) Efficiency implies equal distribution of resources (&/or) outcomes. The statement is TRUE for economic efficiency thus not choose.

Since efficiency makes everyone betteroff (ref. Pareto efficiency) thus the FALSE statement regarding efficiency is (c) (ANSWER)

Rahul Sunny answered 1 year ago

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