Resources are efficiently allocated when production occurs at that output level where price:

Question

Quizplus · Accepted Answer

When the price equals marginal cost, it means that the cost of producing one more unit of output is equal to the revenue received from selling that unit. This is the output level where the economic efficiency is maximized, as producing more or less than that output level would result in a decrease in economic efficiency. Therefore, allocating resources at the output level where price equals marginal cost is the best choice for efficient resource allocation.

Resources Are Efficiently Allocated When Production Occurs at That Output