When an economy is in the position where no person can be made better off without making another person worse off, it:
A)income will be distributed equally.
B)exhibits allocative efficiency.
C)has maximized its social utility irrespective of any pollution.
D)has eliminated all opportunity costs.
E)has distributed all opportunity cost as equitably as possible.

Question

Quizplus · Accepted Answer

When an economy exhibits allocative efficiency, it means that resources are allocated in the most efficient way possible, such that producing more of one good would make someone worse off, while producing more of another good would make someone else better off. This is also referred to as Pareto efficiency or Pareto optimality. It does not necessarily imply income equality or the elimination of opportunity costs, but rather, it focuses on maximizing social welfare by allocating resources in the most efficient manner.

When an Economy Is in the Position Where No Person