When the market achieves allocative efficiency,
A)marginal benefit equals marginal cost.
B)marginal benefit is at its maximum.
C)marginal benefit exceeds marginal cost by as much as possible.
D)marginal cost exceeds marginal benefit by as much as possible.
E)marginal cost is at its minimum.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when marginal benefit (MB) equals marginal cost (MC), meaning that resources are being allocated in the most efficient way to produce the optimal amount of goods and services. At this point, society is getting the most satisfaction from the goods and services produced and resources are being used efficiently.

When the Market Achieves Allocative Efficiency