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FSOT Full Test Bank

Category - Economics

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How is efficiency defined in macroeconomics?

Reducing cost as much as possible
Allocating resources to maximize total utility
Matching supply and demand as closely as possible
Matching marginal cost and marginal utility as nearly as possible

Explanation

Answer: B - Efficiency is the allocation of scarce resources to maximize total utility. For instance, selling a good to the highest bidder maximizes utility because the seller gets the highest price and the person who most values the object receives it.

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