Answer to Question #267955 in Microeconomics for manuze

Question

Explain the difference between efficiency and equity.

Elucidate the role of the government in enhancing efficiency and equity

Answer 1

Efficiency is the production of goods and services at low cost without affecting their quality while equity is the equal distribution of products in an economy with fair profits.

By use of economic policy the government takes part in ensuring there are no inequalities in an economy. These policies increases human capital and hence increase in productivity which improves equitty.

The government makes sure there are ordinary prices for goods and service and hence improves the efficiency in the economy.