What is implied if an economy achieves allocative efficiency?
A)Products are being produced at their lowest cost.
B)Everyone is able to obtain everything he or she desires.
C)The cost of an additional item would be less than its price.
D)The income of the society is being equitably distributed.
E)The best combination of goods is being produced.

Question

Quizplus · Accepted Answer

Allocative efficiency implies that the economy is producing the optimal combination of goods and services, meaning that the society is getting the most value from the resources that are available. This does not necessarily mean that everyone is able to obtain everything they desire or that the cost of an additional item would be less than its price. It also does not ensure the equitable distribution of income. Therefore, the best choice is E, which states that the best combination of goods is being produced.

What Is Implied If an Economy Achieves Allocative Efficiency