Allocative inefficiency implies that
A) goods are produced at too high a cost.
B) the people who want a specific good the most cannot get it, while others can.
C) too many Twinkies and too few Ding Dongs are produced.
D) workers are lazy.

Question

Quizplus · Accepted Answer

Allocative efficiency is achieved when goods and resources are allocated in a way that maximizes the overall well-being of society. Allocative inefficiency, therefore, implies that resources are being used in a way that does not maximize well-being. One common form of allocative inefficiency is when the people who want a specific good the most cannot get it, while others can. This is because resources are being directed towards producing goods that are less valuable to society overall. The other choices (A, C, and D) do not accurately describe the concept of allocative inefficiency.

Allocative Inefficiency Implies That