To achieve allocative efficiency, one must compare the
A) marginal cost to the production efficiency cost.
B) marginal benefit of a good to its marginal cost.
C) opportunity cost to the attainable point on the production possibilities frontier.
D) point of production efficiency to the point of allocative efficiency.
E) marginal cost of a good to its opportunity cost.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the marginal benefit of a good or service is equal to its marginal cost. This means that society is obtaining the maximum level of satisfaction from the available resources. Therefore, comparing the marginal benefit to the marginal cost is the key to achieving allocative efficiency.

To Achieve Allocative Efficiency, One Must Compare the