What must be true for allocative efficiency to hold?
A)Price must equal marginal revenue of the last unit sold.
B)Price must equal the marginal cost of the last unit produced.
C)Average variable cost is minimised in production.
D)Average total cost is minimised in production.

Question

Quizplus · Accepted Answer

Allocative efficiency is achieved when price equals the marginal cost of the last unit produced. This ensures that resources are allocated in the most efficient way, and society gets the maximum benefit from the resources used. Therefore, option B is the correct answer. Options A, C, and D are not related to allocative efficiency.

What Must Be True for Allocative Efficiency to Hold