When an economy produces at its allocatively efficient production point,
A) a society can increase the production of all goods.
B) scarcity is not a problem.
C) resources are not limited.
D) a society can increase the production of one good only by decreasing the production of some other good that is valued more highly.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when resources are distributed in a way that maximizes the net benefit to society. Therefore, to increase production of one good, production of another, more highly valued good must decrease, as resources are limited and must be allocated between competing uses.

When an Economy Produces at Its Allocatively Efficient Production Point