When we cannot produce more of any good without giving up some other good that we value more highly, we have achieved
A) equity.
B) allocative efficiency.
C) the production point where the marginal benefit exceeds the marginal cost by as much as possible.
D) economic growth.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when resources are distributed in a way that the goods produced reflect consumer preferences and every good is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it. This means we cannot produce more of any good without giving up some other good that we value more highly, indicating that resources are being used in the most valuable way according to consumer preferences.

When We Cannot Produce More of Any Good Without Giving