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.

Explanation:

The equity-efficiency trade-off refers to the idea that policies aimed at improving equity (fairness of economic outcomes) often come at the cost of reducing economic efficiency (optimal use of resources to maximize output), and vice versa. Let's analyze each option:

1. The first statement is incorrect because it claims equity and efficiency always improve together, which contradicts the trade-off concept.
2. The second statement focuses only on government intervention and efficiency, not the trade-off between equity and efficiency.
3. The third statement is an extreme, inaccurate claim; the least efficient outcome is not inherently the fairest, and this does not capture the mutual trade-off.
4. The fourth statement correctly describes the trade-off: actions to make outcomes fairer (increase equity) can lead to lower efficiency.

Answer:

Actions intended to make economic outcomes fairer may cause efficiency to decrease.