Question

Productive efficiency occurs when a good or service​ (such as the distribution of​ tickets) is produced at the lowest possible cost. Is this an efficient way to distribute the​ tickets? This is
A. an equitable way to distribute the tickets because everyone has an equal chance of getting a ticket.
B. not an equitable way to distribute the tickets because there may be enough tickets for faculty and staff.
C. not an equitable way to distribute the tickets because some students who really want them may be unable to go and get them.
D. an equitable way to distribute the tickets because the students who really want them will be able to go and get them.

Answer 1

Answer:

The correct answer is option C.

Explanation:

Productive efficiency means that resources are allocated in such a way that goods and services are produced at the minimum possible cost. Though it implies no wastage of resources, the distribution is not efficient.

This is because, in this situation, tickets will not be available to all. Those students who really want them may not be able to go and get them. This means that welfare may not be maximized.

When the production of goods and services is according to the preference of the consumer, it is called allocative efficiency.