Which comparison of efficiency and equity is most accurate
A)Efficiency deals with the size of the economic pie and equity deals with how fairly the pie is sliced.
B)Equity can be judged on positive grounds, whereas efficiency requires normative judgments.
C)Efficiency is more difficult to evaluate than equity.
D)Equity and efficiency are both maximized in a society when total surplus is maximized.

Question

Quizplus · Accepted Answer

Efficiency and equity are two important goals of economic systems. Efficiency is concerned with producing the maximum output of goods and services with given resources or inputs, while equity is concerned with the distribution of those goods and services among individuals or groups in society. Therefore, option A is the most accurate comparison of efficiency and equity, as it correctly distinguishes the two concepts and their respective focus. Option B is incorrect because both efficiency and equity can and should be evaluated through positive analysis and normative judgments. Option C is incorrect because while measuring efficiency may require technical knowledge and data, equity is often more subjective and value-laden, making it harder to evaluate objectively. Option D is incorrect because the maximization of total surplus does not necessarily ensure the equitable distribution of benefits or costs.

Which Comparison of Efficiency and Equity Is Most Accurate