If a market is allocatively efficient,
A)firms are minimizing marginal cost
B)firms are minimizing total cost
C)consumers are minimizing expenditures
D)it must be impossible to increase total utility
E)it must be impossible to decrease output

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when resources are distributed in a way that maximizes total utility, meaning it is impossible to increase total utility without reallocating resources in a way that would decrease utility elsewhere.

If a Market Is Allocatively Efficient