We say that equilibrium in a perfectly competitive market is allocatively efficient because

Question

Quizplus · Accepted Answer

Allocative efficiency means that resources are allocated in a way that maximizes total welfare, which is achieved in a perfectly competitive market when the market equilibrium is reached. At this point, the sum of consumer and producer surplus is maximized, meaning that both consumers and producers are able to gain the most benefit possible from the exchange of goods and services. Therefore, choice A is the correct answer.

We Say That Equilibrium in a Perfectly Competitive Market Is