For resource use to be allocatively efficient,when the marginal benefit of a slice of pizza exceeds the marginal cost,________.
A) more slices of pizza should be produced
B) fewer slices of pizza should be produced
C) no more slices of pizza should be produced
D) allocative efficiency is reached only if the marginal benefit exceeds the marginal cost by as much as possible
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

Allocative efficiency is reached when the marginal benefit of consuming the last unit of a good equals its marginal cost. So, if the marginal benefit of a slice of pizza exceeds the marginal cost, meaning that the value of additional benefit gained from eating a slice of pizza is greater than the cost of producing it. In this case, more slices of pizza should be produced to satisfy the demand of consumers and achieve allocative efficiency.

For Resource Use to Be Allocatively Efficient,when the Marginal Benefit