Economic inefficiency results when individuals know the true opportunity costs of their decisions.

Question

Quizplus · Accepted Answer

Economic efficiency results when individuals make decisions that lead to the greatest total economic surplus, taking into account both their own costs and benefits as well as the costs and benefits to society as a whole. When individuals accurately assess the opportunity costs of their decisions, they are more likely to make efficient decisions that maximize economic surplus. Therefore, economic inefficiency is more likely to result when individuals do not know the true opportunity costs of their decisions.

Economic Inefficiency Results When Individuals Know the True Opportunity Costs