If there is allocative efficiency in a purely competitive market for a product, the maximum price consumers are willing to pay is
A) less than marginal benefit.
B) greater than marginal cost.
C) equal to the amount of efficiency or deadweight losses.
D) equal to the minimum price producers are willing to accept.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the price consumers are willing to pay (reflecting marginal benefit) equals the minimum price producers are willing to accept (reflecting marginal cost), ensuring no deadweight loss.

If There Is Allocative Efficiency in a Purely Competitive Market