When a competitive market achieves allocative efficiency, it implies that
A)the marginal benefit of having the product is greater than the marginal cost.
B)the buyers are getting the maximum consumer surplus from the product.
C)the combined consumer and producer surplus is maximized.
D)the quantity demanded is lower than the quantity supplied.

Question

Quizplus · Accepted Answer

Allocative efficiency in a competitive market occurs when the combined consumer and producer surplus is maximized, indicating that resources are allocated in the most efficient manner, where the value placed on a product by a consumer is equal to the cost of producing it.

When a Competitive Market Achieves Allocative Efficiency, It Implies That