Allocative efficiency means achieving the optimal or most desired point on the production possibilities curve.

Question

Quizplus · Accepted Answer

Allocative efficiency refers to the ideal allocation of resources such that society's welfare is maximized. This ideal allocation happens at the point where the production possibilities curve (PPC) intersects with the highest point on the community indifference curve. Therefore, allocative efficiency is achieving the optimal or most desired point on the PPC. Hence, Option A is correct.

Allocative Efficiency Means Achieving the Optimal or Most Desired Point