The best combination of goods and services is being produced when marginal cost and marginal benefit are equal.

Question

Quizplus · Accepted Answer

This statement is true according to the fundamental economic principle of equating marginal cost to marginal benefit to achieve allocative efficiency. Allocative efficiency means that resources are being used in the most efficient way to produce goods and services that satisfy consumers' wants and needs. When marginal cost and marginal benefit are equal, any further production of a good or service would not create a surplus of benefits over costs or cause a shortfall of benefits compared to costs, which implies that the production has reached the optimal level.

The Best Combination of Goods and Services Is Being Produced