An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer?

EduRev

All Courses

Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity

Open App

UPSC Exam > UPSC Questions > An economy is said to have reached its highes...

An economy is said to have reached its highest possible efficiency when

a)
Economy is utilizing all its natural resources in production
b)
Equal income level has been reached for all economic agents
c)
Factors of production are allocated optimally in the production of goods and services
d)
Unemployment level has been consistently maintained at zero

Correct answer is option 'C'. Can you explain this answer?

Join for Free

Join for Free

Most Upvoted Answer

An economy is said to have reached its highest possible efficiency whe...

Explanation:

Efficiency in an economy refers to the ability to produce the maximum possible output with the given resources. When an economy is said to have reached its highest possible efficiency, it means that it is operating at its full potential and there is no room for improvement in the allocation of resources.

Factors of production

The factors of production include land, labor, capital, and entrepreneurship. Allocating these factors optimally means that they are being used in the most efficient way to produce goods and services. This requires careful planning and coordination to ensure that resources are not wasted or underutilized. When factors of production are allocated optimally, it means that the economy is producing goods and services at the lowest possible cost and with the highest possible output.

Utilization of natural resources

Utilizing all natural resources in production is important for achieving efficiency, but it is not sufficient on its own. While it is important to make use of available resources, simply using all natural resources does not guarantee optimal allocation. It is possible for an economy to exhaust its natural resources without achieving the highest level of efficiency if other factors of production are not allocated optimally.

Equal income level

While achieving equal income levels for all economic agents is an important goal for ensuring fairness and reducing inequality, it is not a sufficient condition for reaching the highest level of efficiency. In fact, in some cases, achieving equal income levels may require redistributing resources in a way that does not necessarily lead to optimal allocation. Efficiency is about maximizing output and minimizing costs, which may not always align with equal income distribution.

Unemployment level

Maintaining zero unemployment is a desirable goal for any economy, but it is not a direct indicator of efficiency. While low unemployment can indicate a well-functioning economy, efficiency is about the optimal use of resources rather than focusing solely on employment levels. It is possible for an economy to have low unemployment but still not be operating at its highest level of efficiency if there are inefficiencies in resource allocation.

Conclusion:

Option C, which states that the highest possible efficiency is achieved when factors of production are allocated optimally in the production of goods and services, is the correct answer. Efficient allocation of resources ensures that an economy is producing the maximum possible output with the given resources, leading to lower costs and higher overall productivity.

Answered by Notes Wala · View profile

Free Test

FREE

Test: August 2022 Weekly Current Affair - 1
25 Ques | 30 Min

Start Free Test

View all free UPSC tests

Community Answer

An economy is said to have reached its highest possible efficiency whe...

Economic efficiency is when every scarce resource in an economy is used and distributed among producers and consumers in a way that produces the most economic output and benefit to consumers.
Economic efficiency can involve efficient production decisions within firms and industries, efficient consumption decisions by individual consumers, and efficient distribution of consumer and producer goods across individual consumers and firms.
It is not necessary that income levels will be equal when resources are efficiently allocated.

View all answers Start learning for free

Explore Courses for UPSC exam

Similar UPSC Doubts

An economy is said to have reached its highest possible efficiency when

View answer

It is often forgotten that globalization, is not only about policies on international economic relationships and transactions, but has equally to do with domestic policies of a nation. Policy changes necessitated by meeting the internationally set conditions (by WTO etc.) of free trade and investment flows obviously affect domestic producers and investors. But the basic philosophy underlying globalization emphasizes absolute freedom to markets to determine prices and production and distribution patterns, and view government interventions as processes that create distortions and bring in inefficiency. Thus, public enterprises have to be privatized through disinvestments and sales; sectors and activities hitherto reserved for the public sector have to be opened to the private sector. This logic extends to the social services like education and health. Any restrictions on the adjustments in workforce by way of retrenchment of workers should also be removed and exit should be made easier by removing any restrictions on closures. Employment and wages should be governed by free play of market forces, as any measure to regulate them can discourage investment and also create inefficiency in production.Above all, in line with the overall philosophy of reduction in the role of the state, fiscal reforms should be undertaken to have generally low levels of taxation and government expenditure should be kept to the minimum to abide by the principle of fiscal prudence. All these are policy actions on the domestic front and are not directly related to the core items of the globalization agenda, namely free international flow of goods and finance.Q.According to the passage, the basic philosophy of globalization is to

View answer

Consider the following statements about National Rural Employment Guarantee Act 2005 (NREGA 2005). 1. Under NREGA 2005, all those who are able to, and are in need of, work are guaranteed 100 days of employment in a year by the government2. If the government fails in its duty to provide employment, it will give unemployment allowances to the people3. The types of work that would in future help to increase the production from land will be given preference under the ActWhich of the statements is/are correct?

View answer

With reference to the Production Linked Incentive (PLI) Scheme on ‘National programme on High Efficiency Solar PV Modules’, consider the following statements:1. The Union Cabinet has approved the second tranche of Production Linked Incentive (PLI) Scheme on ‘National programme on High Efficiency Solar PV Modules’ for achieving manufacturing capacity of Giga Watt scale in High Efficiency Solar PV Modules.2. About 65 thousand Mega Watt per annum manufacturing capacity of fully and partially integrated solar PV modules will be installed.Which of the statements given above is/are correct?

View answer

Disguised unemployment is

View answer

Top Courses for UPSCView all

Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

Lucent for GK

History for UPSC CSE

Indian Polity for UPSC CSE

CSAT Preparation

Top Courses for UPSC

View all

An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer?

Share with a Friend

Answer this doubt

Question Description
An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer?.

Solutions for An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC. Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.

Here you can find the meaning of An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice An economy is said to have reached its highest possible efficiency whena)Economy is utilizing all its natural resources in productionb)Equal income level has been reached for all economic agentsc)Factors of production are allocated optimally in the production of goods and servicesd)Unemployment level has been consistently maintained at zeroCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice UPSC tests.

Explore Courses for UPSC exam