When a fixed stock of inputs cannot be reallocated among firms in an economy without reducing the output of at least one of the goods that is produced in the economy, the allocation satisfies:
A)exchange efficiency.
B)input efficiency.
C)substitution efficiency.
D)Walras' Law.

Question

Quizplus · Accepted Answer

This scenario corresponds to the concept of input efficiency, which states that given a fixed amount of inputs, the economy must efficiently allocate those inputs among firms to maximize output. If any firm were to receive less of a necessary input, their output would decrease, resulting in a less efficient allocation of inputs. Exchange efficiency refers to the efficient allocation of goods among consumers, substitution efficiency refers to the ability to substitute one good for another, and Walras' Law pertains to the equilibrium of supply and demand in a market. This is a characteristic of input efficiency, which means that the economy is using its inputs in the most efficient way possible to produce the maximum amount of goods and services. If the allocation cannot be reallocated without reducing output, it suggests that there is no wastage or unused resources. Exchange efficiency is about the distribution of goods and services, substitution efficiency relates to the ability of consumers to replace one good with another, and Walras' law is a macroeconomic concept about the relationship between the markets for goods and money.

When a Fixed Stock of Inputs Cannot Be Reallocated Among