To achieve allocative efficiency, an economy
A) must have increases in technology.
B) can produce either on or within its PPF.
C) might leave some resources unemployed.
D) does not necessarily need to be production efficient.
E) must produce on its PPF.

Question

Quizplus · Accepted Answer

Allocative efficiency means that an economy is producing the combination of goods and services that best satisfies the wants and needs of the people, given the available resources. This means that the economy must produce on its PPF, as this is the combination of goods and services that maximizes output given the available resources.

To Achieve Allocative Efficiency, an Economy