If the marginal benefit of consuming another unit of a good is positive, then to reach the allocatively efficient level of output more of the good should be produced and consumed
A) if the total benefit of the good is greater than its total cost.
B) no matter what..
C) as long as the consumer can afford to pay for it.
D) if the marginal benefit of the good is greater than its marginal cost.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the marginal benefit of the good is equal to the marginal cost of production. If the marginal benefit of consuming another unit of the good is positive, it means that the additional benefit gained from consuming that unit is greater than the cost of producing it. Therefore, producing more of the good will be beneficial until the marginal benefit and marginal cost are equal, which is the allocatively efficient level of output.

If the Marginal Benefit of Consuming Another Unit of a Good