Question

Which statement describes the equity‑efficiency trade‑off? There is always a more equitable outcome that is also more efficient. Government intervention can increase efficiency in a market. The least efficient economic outcome is the fairest outcome. Actions intended to make economic outcomes fairer may cause efficiency to decrease.

Answer 1

Answer:

The correct answer is the last statement.

Explanation:

Actions that are intended to make economic outcomes fairer may cause a reduction in economic efficiency. This is because we have limited resources with alternative uses and we need to use these resources to satisfy our unlimited wants and needs. If we increase spending resources on one use we need to sacrifice its alternative. If we try to achieve equity we need to compromise with efficiency.