Allocative efficiency is achieved when
A)goods and services are fairly distributed among consumers in an economy.
B)firms produce the goods and services that consumers value most.
C)firms produce goods and services at the lowest cost.
D)there are no shortages or surpluses in the market.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when resources are allocated in a way that maximizes consumer satisfaction, or in other words, when firms produce goods and services that consumers value most. This means that resources are not being wasted on producing goods and services that are not in demand, or producing goods and services at a higher cost than necessary. Allocative efficiency does not guarantee a fair distribution of goods and services, nor does it ensure there are no shortages or surpluses in the market.

Allocative Efficiency Is Achieved When