5 Questions
What is the situation called when the marginal private benefits (MPB) are equal to the marginal private costs (MPC) for an individual consumer or firm?
Private efficiency
When is social efficiency achieved?
When MSB equals MSC
What do economists describe as an improvement in social efficiency without making anyone worse off?
Pareto improvement
What is the failure of the market to allocate resources efficiently known as?
Market failure
What leads to welfare loss for society according to the text?
Resource misallocation
Test your knowledge of market failure and allocative efficiency in business economics. This quiz covers concepts such as social and private costs and benefits, marginal private and social benefits, and the best allocation of resources in a free, competitive market.
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