Asked by Irene Lujano on May 16, 2024
Verified
Allocative efficiency occurs when the
A) minimum of average total cost equals average revenue.
B) minimum of average total cost equals marginal revenue.
C) marginal cost equals the marginal benefit to society.
D) marginal revenue equals marginal benefit to society.
Allocative Efficiency
A state of resource allocation where goods and services are distributed according to consumer preferences and in a way that maximizes social welfare.
Marginal Cost
The uptick in cost associated with producing an extra unit of a product or service.
- Gain insight into the theory of allocative and productive efficiency across different market configurations.
Verified Answer
LA
Leena AlayedhMay 22, 2024
Final Answer :
C
Explanation :
Allocative efficiency is achieved when the marginal cost of producing a good or service equals the marginal benefit to society, indicating that resources are being allocated in the most efficient way to meet the needs and wants of society.
Learning Objectives
- Gain insight into the theory of allocative and productive efficiency across different market configurations.