Resources are efficiently allocated when production occurs at that point at which

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the price of the good or service is equal to the marginal cost of producing that good or service. This ensures that resources are being allocated in the most efficient way, as producing more of the good or service would cost more than the value it provides to consumers, and producing less would not fully satisfy consumer demand. Hence, when price is equal to marginal cost, resources are being allocated efficiently.

Resources Are Efficiently Allocated When Production Occurs at That Point