Question 1

If the construction of a new elementary school would create $5 million worth of benefits for citizens and cost $7 million to construct, then using the criterion of economic efficiency, the school

Accepted Answer

The criterion of economic efficiency suggests that a project should only be undertaken if the benefits exceed the costs. In this case, the costs ($7 million) exceed the benefits ($5 million), so the school should not be built.

Question 2

If an economic action generates more costs than benefits, the action

Accepted Answer

If an economic action generates more costs than benefits, it is inefficient and should not be undertaken as it reduces overall economic welfare.

Question 3

The standard economists use to assess whether an activity should be undertaken is

Accepted Answer

Economic efficiency is the standard used by economists to determine if an activity should be undertaken, as it considers both the costs and benefits to ensure resources are used optimally.

Question 4

When economists say that an activity meets the criterion for economic efficiency, they mean

Accepted Answer

Economic efficiency occurs when the benefits of an activity exceed the costs, maximizing net benefits.

Quiz 5: Difficult Cases for the Market, and the Role of Government

If the construction of a new elementary school would create $5 million worth of benefits for citizens and cost $7 million to construct, then using the criterion of economic efficiency, the school

If an economic action generates more costs than benefits, the action

The standard economists use to assess whether an activity should be undertaken is

When economists say that an activity meets the criterion for economic efficiency, they mean