Figure 11-11

-Refer to Figure 11-11.What is the allocatively efficient output for the firm represented in the diagram?

Question

Figure 11-11
 
-Refer to Figure 11-11.What is the allocatively efficient output for the firm represented in the diagram?

Quizplus · Accepted Answer

Allocative efficiency occurs when the marginal cost of production equals the marginal benefit to consumers. In the diagram, this occurs at the intersection of the marginal cost (MC) and marginal benefit (MB) curves at point Q₃. At this point, the firm is producing the optimal quantity of output that maximizes the overall welfare of society. Therefore, the allocatively efficient output for the firm is Q₃ units.

Figure 11-11 -Refer to Figure 11-11.What Is the Allocatively Efficient Output for Allocatively