When every good or service is produced up to the point where the last unit provides ________, allocative efficiency occurs.
A)a marginal benefit to society equal to the marginal cost of producing it
B)a marginal benefit to society greater than the marginal cost of producing it
C)a marginal benefit to society less than the marginal cost of producing it
D)a marginal benefit to society equal to zero

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the production of a good or service is such that the last unit produced provides a marginal benefit to society equal to the marginal cost of producing it. In this scenario, resources are allocated in a way that maximizes societal welfare because the value of the last unit produced to society is equal to the cost of producing it. This represents the optimum level of production, where no more units can be produced without increasing costs more than the value they provide.

When Every Good or Service Is Produced Up to the Point