Which of the following is correct?
A)Efficiency deals with the size of the economic pie and equity deals with how fairly the pie is sliced.
B)Equity can be judged on positive grounds whereas efficiency requires normative judgments.
C)Efficiency is more difficult to evaluate than equity.
D)Equity and efficiency are both maximized in a society when total surplus is maximized.

Question

Quizplus · Accepted Answer

Efficiency and equity are both important economic goals. Efficiency is concerned with producing the maximum output with the minimum input or eliminating waste, while equity focuses on fair distribution of resources or outcomes. Therefore, option A accurately defines both terms and their respective scope of concern. Option B is incorrect because both efficiency and equity require normative judgments. Option C is also incorrect because efficiency is relatively easier to evaluate than equity, which is often subjective and context-dependent. Option D is incorrect because maximizing total surplus does not necessarily ensure an equitable distribution of benefits, which may require government intervention or redistribution policies.

Which of the Following Is Correct