Allocative efficiency refers to a situation where
A)opportunity costs are equal.
B)we cannot produce more of any one good without giving up some other good.
C)goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.
D)opportunity cost is zero.
E)none of the above.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit. This means that resources are being allocated in the most efficient way, and any changes to production would result in a reduction in overall societal welfare. Options A, B, and D do not fully capture the concept of allocative efficiency, and Option E is incorrect as there must be a correct answer.

Allocative Efficiency Refers to a Situation Where