If a firm maximizes output from a stock of available resources, it must be achieving allocative efficiency.

Question

Quizplus · Accepted Answer

Allocative efficiency refers to the allocation of resources in a way that maximizes society's total net benefit. While maximizing output is important for production efficiency, it does not necessarily mean that resources are being allocated in the most efficient way possible to meet society's needs and wants. Therefore, maximizing output alone does not guarantee allocative efficiency.

If a Firm Maximizes Output from a Stock of Available