Question 1
Efficiency occurs when
◦ 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.
Question 2
Resources are allocated efficiently when
◦ the market produces what people want.
◦ economic profits are zero.
◦ output is distributed in an equitable fashion.
◦ output is produced in a sustainable fashion.