What is allocative efficiency?
A)It refers to a situation in which resources are allocated to their highest profit use.
B)It refers to a situation in which resources are allocated such that goods can be produced at their lowest possible average cost.
C)It refers to a situation in which resources are allocated such that the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it.
D)It refers to a situation in which resources are allocated fairly to all consumers in a society.

Question

Quizplus · Accepted Answer

Allocative efficiency refers to a situation where resources are allocated in such a way that the last unit of output provides a marginal benefit to consumers equal to the marginal cost of producing it. This means that the resources are being allocated to produce the optimal amount of goods to satisfy consumer demand at the lowest possible cost. This ensures that the economy is using its resources efficiently and achieving the maximum benefit from them.

What Is Allocative Efficiency