Notesecon2 - ECONOMIC POLICY Four criteria are frequently...

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ECONOMIC POLICY Four criteria are frequently applied in judging economic outcomes: EFFICIENCY Efficiency- in economics, allocative efficiency. An efficient economy is one that produces what people want at the least possible cost If all members of society are vegetarians and half of the resources are used to produce meat then the result would be inefficient If a firm could produce its product using 25% less labor and energy without sacrificing quality, it too is inefficient When a company reorganizes its production or adopts a new technology that enables it to produce more of its product with fewer resources, without sacrificing quality, it has made an efficient change Inefficiencies are sometimes caused by government regulations i.e. corn would be best produced in Iowa, but Iowa only lets it produce wheat EQUITY Equity- fairness Lies in the eye of the beholder Fairness may imply alleviating poverty but the extent to which the poor should receive cash benefits from the government is the
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Notesecon2 - ECONOMIC POLICY Four criteria are frequently...

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