Question

Toy Town makes and sells jigsaw puzzles and strategy board games. Its products are of excellent quality, but fail to meet consumer needs. Which of the following is most likely to be true with regard to Toy Town?

A. It has a high level of efficiency and low level of effectiveness.

B. It has a high level of effectiveness and low level of efficiency.

C. Its product manager chooses the wrong goals to pursue and uses the resources inadequately.

D. Its product manager chooses the right goals to pursue and uses the resources wisely.

E. Its product manager responds quickly to change.

Answer 1

Toy Town likely has high efficiency in production but low effectiveness in meeting consumer needs, suggesting issues with allocative efficiency and strategic goal setting.

Step-by-step explanation:

If Toy Town makes and sells jigsaw puzzles and strategy board games that are of excellent quality but fail to meet consumer needs, it is most likely that Toy Town has a high level of efficiency and low level of effectiveness. This assesses the scenario where the product manager may be choosing the wrong goals, which indicates that the products are not aligning well with the market demand despite being made well. It suggests they are failing at allocative efficiency, which is about ensuring that resources are tailored to consumer preferences and needs. In the context of economic theory, productive efficiency and allocative efficiency are critical in assessing market structures. Perfect competition is deemed 'perfect' because it typically achieves both in the long run. Toy Town, while capable of producing goods efficiently, is not effectively matching its products with consumer desires, which suggests that it has room for improvement in terms of market responsiveness and strategic goal setting.