Allocative efficiency is achieved when the production of a good occurs where
A)P = minimum ATC.
B)P = MC.
C)P = minimum AVC.
D)total revenue is equal to TFC.

Question

Quizplus · Accepted Answer

Allocative efficiency is achieved when the price of a good is equal to the marginal cost (MC) of production. This indicates that resources are being allocated in a way that maximizes the overall benefit to society, as the value consumers place on a good (reflected by the price they are willing to pay) matches the cost to society of making one more unit of the good.

Allocative Efficiency Is Achieved When the Production of a Good