Asked by brianna mcrae on Jun 26, 2024
Verified
An inefficient allocation of resources will occur when:
A) decision makers are faced with the full costs and benefits of their actions.
B) there are clearly defined property rights.
C) no alternative would increase the welfare of society.
D) decision makers are not faced with the full benefits and costs of their choices.
Inefficient Allocation
A situation where resources are not distributed or utilized in a way that maximizes potential output or welfare.
Decision Makers
Individuals or groups responsible for making choices that determine the course of actions to be followed by an organization or system.
- Learn about the impact of private markets' responses to goods characterized by nonexcludability and nonrivalry on market collapse.
- Examine the influence of state intervention in addressing market defects concerning public assets and common resources.
Verified Answer
CA
Chinedu AjuruchiJul 03, 2024
Final Answer :
D
Explanation :
When decision makers are not faced with the full benefits and costs of their choices, they are likely to make decisions that do not take into account the full economic impact of their actions, resulting in an inefficient allocation of resources. This can occur when externalities are present, such as pollution or congestion, or when there are market failures, such as monopolies or public goods. Without proper incentives to consider the full impact of their choices, decision makers may pursue their own interests at the expense of society as a whole, leading to an allocation of resources that is not efficient.
Learning Objectives
- Learn about the impact of private markets' responses to goods characterized by nonexcludability and nonrivalry on market collapse.
- Examine the influence of state intervention in addressing market defects concerning public assets and common resources.