Resource use is allocatively efficient when marginal benefit is
A) equal to marginal cost.
B) greater than marginal cost.
C) less than marginal cost.
D) at its maximum value.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when resources are allocated in a way that produces the most benefit to society. This occurs when the marginal benefit (MB) equals the marginal cost (MC) of production. At this point, society is getting the most value for its resources, and any deviation from this point would result in either underutilization of resources or wastage of resources. Therefore, allocative efficiency is achieved when MB = MC.

Resource Use Is Allocatively Efficient When Marginal Benefit Is