In a competitive market economy with no externalities, allocative efficiency would exist if

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Allocative efficiency occurs when prices equal marginal costs in all markets because this ensures that resources are being allocated in the most efficient way possible, producing the quantity of goods and services that maximizes society's satisfaction. This is the condition that maximizes social welfare and consumer surplus while minimizing producer surplus. In a competitive market economy with no externalities, market forces will naturally drive prices toward marginal cost equilibrium.

In a Competitive Market Economy with No Externalities, Allocative Efficiency