MCQ. Which of the following statement(s) are true with respect to the concept of ‘EFFICIENCY’ as used in mainstream economics?
- Efficiency occurs when no possible reorganisation of production can make anyone better off without making someone else worse off
- An economy is clearly inefficient if it is inside the Production Possibility Frontier (PPF)
- At a minimum, an efficient economy is on its Production Possibility Frontier (PPF)
- The terms such as ‘Pareto Efficiency’, ‘Pareto Optimality’ and ‘Allocative Efficiency’ are all essentially one and the same which denote ‘efficiency in resource allocation’
(a) 1 and 4
(b) 1 and 3
(c) 2 and 3
(d) 1, 2, 3 and 4
Answer: (c) 2 and 3
