Which of the following are the rules for finding the point of allocative efficiency?
A) Produce on the PPF and then produce where the marginal benefit and marginal cost are as large as possible.
B) Produce on the PPF and then produce where marginal benefit equals marginal cost.
C) Produce on the PPF and then produce where marginal benefit and marginal cost are constant.
D) Produce on the PPF and then produce where the marginal benefit exceeds marginal cost by as much as possible.
E) Produce anywhere on the PPF.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs where marginal benefit equals marginal cost. Therefore, the best rule for finding the point of allocative efficiency is to produce on the PPF and then produce where marginal benefit equals marginal cost. Choice B is the only option that reflects this rule.

Which of the Following Are the Rules for Finding the Point