What is the term for the production of that combination of products which best satisfies consumers' demands?
A)Allocative efficiency.
B)Productive efficiency.
C)Marginal efficiency.
D)Optimal efficiency.

Question

Quizplus · Accepted Answer

Allocative efficiency refers to the production of the combination of products that maximizes consumers' satisfaction based on their willingness to pay. This means that resources are allocated in such a way that the marginal benefit from the production of each product is equal to its marginal cost, resulting in a situation where further reallocation would reduce overall satisfaction. Therefore, by achieving allocative efficiency, the economy is producing the optimal combination of goods and services that satisfies consumer preferences. Productive efficiency (B) is concerned with producing goods and services at the lowest possible cost, while marginal efficiency (C) and optimal efficiency (D) are not commonly used economic terms.

What Is the Term for the Production of That Combination