When an economy produces at its allocatively efficient production point,
A) resources are not limited.
B) a society can increase the production of all goods.
C) scarcity is not a problem.
D) a society can increase the production of one good only by decreasing the production of some other good that is valued more highly.

Question

Quizplus · Accepted Answer

Allocative efficiency means producing goods at a point where the marginal benefit equals the marginal cost. At this point, resources are being used in the most efficient way possible. Any increase in production of one good would require reallocating resources from the production of another good, which would lead to a decrease in its production. Therefore, a society can increase the production of one good only by decreasing the production of some other good that is valued more highly.

When an Economy Produces at Its Allocatively Efficient Production Point