Mr Peabody chooses to invest in companies that produce goods and services based on consumer preferences. Mr Peabody is investing in companies that are attempting to be:

Question

Quizplus · Accepted Answer

Mr. Peabody's investment strategy focuses on companies that produce goods and services based on consumer preferences, indicating that he is prioritizing allocative efficiency. Allocative efficiency is when resources (in this case, investments) are allocated in a way that maximizes consumer satisfaction and meets their wants and needs. Productive efficiency refers to the level at which firms are producing at the lowest cost possible, and it is not related to the consumer preferences aspect of Mr. Peabody's investment strategy. Being guaranteed to make a profit is not a reasonable expectation for any investment, and it is also not related to efficiency in resource allocation. Therefore, choice A is the best answer.

Mr Peabody Chooses to Invest in Companies That Produce Goods