An inefficient allocation of resources will occur when:
A)decision makers are faced with the full costs and benefits of their actions.
B)there are clearly defined property rights.
C)no alternative would increase the welfare of society.
D)decision makers are not faced with the full benefits and costs of their choices.

Question

Quizplus · Accepted Answer

When decision makers are not faced with the full benefits and costs of their choices, they are likely to make decisions that do not take into account the full economic impact of their actions, resulting in an inefficient allocation of resources. This can occur when externalities are present, such as pollution or congestion, or when there are market failures, such as monopolies or public goods. Without proper incentives to consider the full impact of their choices, decision makers may pursue their own interests at the expense of society as a whole, leading to an allocation of resources that is not efficient.

An Inefficient Allocation of Resources Will Occur When