Question

1) In which of the following cases is productive efficiency improved?

Select all that apply:

a) producing more output using the same input resources

b) producing less output using the same input resources

c) producing the same output using fewer input resources

d) producing the same output using more input resources

2) Which of the following are true about productive efficiency?

I. All available resources are employed in production.

II. Workers are well-paid.

III. Points on the PPF curve are the only ones that achieve "productive efficiency".

IV. The mix of goods produced and their distribution to consumers maximizes customer satisfaction.

Select the correct answer below:

a) I and II

b) I and III

c) II and IV

d) III and IV

  

3) The law of diminishing returns states that as additional increments of resources ______________, the marginal benefit from those additional increments _______________.

Select the correct answer below:

a) are reduced, will decline eventually

b) are added; will decline eventually

c) are added; will increase eventually

d) are reduced; will remain the same

Answer 1

Answer 1:

Option a and option c.

Productive efficiency is improved when more output is produced using the same input resources and same output is produced using fewer input resources.In both cases productive efficiency or inputs used to produce one unit of output is falling.

Answer 2:

Option b. According to the concept of production efficiency, all available resources are employed in production and points on the PPF are the only ones that achieve production efficiency.

Answer 3:

Option B. The law of diminishing returns state that as additional increments of resources are added, the marginal benefit from those additional increments will decline eventually.