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Tony just purchased a set of skis on craigslist. Several people contacted the seller, but Tony offered more money. This is an example of:

a. production efficiency.
b. opportunity cost.
c. allocative efficiency.
d. equity.

User Turnerm
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2 Answers

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Final answer:

Tony's offer of more money for the skis on Craigslist is an example of c. allocative efficiency.

Step-by-step explanation:

Allocative efficiency means that among the points on the production possibility frontier, the chosen point is socially preferred at least in a particular and specific sense. In this case, Tony's offer of more money for the skis on Craigslist is an example of allocative efficiency. By offering more money, Tony is indicating that he values the skis more than the other potential buyers, and the seller is allocating the skis to the person who values them most.

Thus, allocative efficiency is used in economics to assess the optimal allocation of resources in the production of goods and services. It occurs when the quantity of each good produced aligns with consumer preferences, ensuring that the overall distribution maximizes societal welfare by equating the marginal benefit to the marginal cost.

User Krishnab
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Answer:

B. opportunity cost.

Explanation: Opportunity cost is the cost that must be given up in order to purchase or acquire something,the extra money added by Tony in order to purchase the set of skis on craigslist.

Opportunity cost is also known as the cost of what was given up, which in this case is the extra money above the cost price of the skis on craigslist paid to acquire the skis, it refers to the value a person could have saved but gave up in pursuit of a given want.

User Nathan Horrigan
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