If a market is such that, at the market equilibrium quantity, the benefit of the last unit produced just equals its marginal cost
A)it has earned a positive economic profit
B)it has achieved productive efficiency
C)it has achieved allocative efficiency
D)it has achieved economies of scale
E)there are further trades than can increase producer surplus

Question

Quizplus · Accepted Answer

At the market equilibrium quantity, where the benefit of the last unit produced just equals its marginal cost, the market has achieved allocative efficiency. This means that resources are allocated in the most efficient way possible, maximizing the overall welfare of society. Therefore, option C is the correct answer. Options A, B, and D are incorrect because they do not relate to the concept of allocative efficiency. Option E is incorrect because if the market has achieved allocative efficiency, there are no further trades that can increase producer surplus.

If a Market Is Such That, at the Market Equilibrium