Microeconomics-Efficiency Criteria [GATE (Graduate Aptitude Test in Engineering) Economics (XH-C1)]: Questions 1 - 2 of 2

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Question 1

Question MCQ▾

Suppose both the production and the consumption of a product generate externalities. At which of the following outputs would output be at the Pareto-efficient level.

Choices

Choice (4)Response

a.

Where marginal private cost equals marginal private benefit.

b.

Where marginal social cost equals marginal social benefit.

c.

Where marginal private cost equals marginal social benefit.

d.

Where marginal social cost equals marginal private benefit.

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Question 2

Question MCQ▾

Suppose a country uses its resources in a Pareto-efficient way. Which of the following statements is true?

Choices

Choice (4)Response

a.

There might be considerable inequality of income among the country՚s citizens.

b.

There might be inefficiency in production.

c.

There might be inefficiency in consumption.

d.

It might be possible to make one person better off without making another person worse off.

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