Allocative efficiency occurs
A) anywhere inside or on the production possibilities frontier.
B) when the total cost of production is minimized.
C) at all points on the production possibilities frontier.
D) at only one point on the production possibilities frontier.
E) at the points where the production possibilities frontier crosses the horizontal or vertical axis.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs at only one point on the production possibilities frontier, which is where the marginal benefit of the last unit produced is equal to its marginal cost. This point represents the optimal allocation of resources and results in maximum overall welfare in the economy.

Allocative Efficiency Occurs