If society produces a pie at the lowest possible cost and then distributes the pie evenly among its population,then:
A) production and allocative efficiency are achieved.
B) only production efficiency is achieved.
C) neither production efficiency nor allocative efficiency is achieved.
D) only allocative efficiency is achieved.

Question

Quizplus · Accepted Answer

Production efficiency is achieved because the pie is produced at the lowest possible cost, but allocative efficiency is not necessarily achieved just by distributing the pie evenly, as allocative efficiency requires resources to be distributed according to consumer preferences.

If Society Produces a Pie at the Lowest Possible Cost