Multiple choice

1. Efficiency occurs when (Points : 1) 

the economy is producing what people want at least possible cost.

the economy has a fair and just distribution of income.

all markets are in equilibrium.

unemployment is low and prices are stable. 

2. Suppose a policy change will generate $100,000 of benefits for low-income families and $120,000 of costs for high-income families. This change can best be described as (Points : 1) 

Pareto efficient.

inefficient.

potentially efficient.

equitable. 

3. The ________ is the share of industry output in sales or employment accounted for by the largest four firms in an industry. (Points : 1) 

concentration ratio

contestability ratio

competitive index

collusive level 

4. Resources are allocated efficiently when (Points : 1) 

the market produces what people want.

economic profits are zero.

output is distributed in an equitable fashion.

output is produced in a sustainable fashion.