Asked by TEENA GAUTAM on May 19, 2024
Verified
Allocative efficiency occurs where (for the last unit)maximum willingness to pay exceeds minimum acceptable price by the greatest amount.
Allocative Efficiency
A state of resource allocation where it is impossible to make any one individual better off without making someone else worse off, ensuring that resources are used for producing the goods and services most desired by society.
Willingness to Pay
The maximum amount an individual is ready to spend on a good or service, reflecting the value the consumer places on it.
- Acquire knowledge about the effect of information disparity on market performances and the principle of allocative efficiency.
Verified Answer
KG
Kimberly GarciaMay 24, 2024
Final Answer :
False
Explanation :
Allocative efficiency occurs when the price of the last unit produced is equal to the maximum willingness to pay, meaning there is no excess in either the willingness to pay over the price or the price over the willingness to pay.
Learning Objectives
- Acquire knowledge about the effect of information disparity on market performances and the principle of allocative efficiency.