Allocative efficiency concerns
A) the allocation of resources such that total economic surplus is maximized.
B) the equitable distribution of resources.
C) discouraging all monopoly firms.
D) producing outputs at lowest possible cost.
E) encouraging monopoly if it generates innovation.

Question

Quizplus · Accepted Answer

Allocative efficiency is concerned with the allocation of resources in such a way that total economic surplus is maximized. This occurs when the marginal benefit of the last unit produced or consumed is equal to its marginal cost. This leads to the greatest overall satisfaction of consumer wants and desires, and the most efficient use of scarce resources.

Allocative Efficiency Concerns