Allocative efficiency occurs in markets when
A)marginal benefit and marginal cost for the last unit sold are equal
B)resources can be reallocated to increase the value of total output
C)goods are produced at the minimum of average total cost
D)goods are distributed evenly among consumers
E)government establishes price ceilings below the market price

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the marginal benefit and marginal cost for the last unit sold are equal. This means that resources are being allocated efficiently to produce the optimal quantity of goods and services that provide the maximum benefit to consumers and society as a whole. This also ensures that the market is operating at the socially optimal point, where the welfare of consumers and producers is maximized.

Allocative Efficiency Occurs in Markets When