When price signals reflect _______ benefits and _______ costs of choices, we expect that the allocation of resources will be _______ .
A) average; average; efficient
B) marginal; marginal; inefficient
C) marginal; average; efficient
D) marginal; marginal; efficient

Question

Quizplus · Accepted Answer

Price signals that reflect marginal benefits and marginal costs of choices are the most efficient in allocating resources because individuals and firms respond to such signals and make decisions that increase their welfare. Therefore, the best choice is option D, where price signals reflect marginal benefits and marginal costs of choices, leading to an efficient allocation of resources.

When Price Signals Reflect _______ Benefits and _______ Costs of Choices

When Price Signals Reflect _ Benefits and _ Costs of Choices