Which of the following conditions does not need to occur for a market to achieve allocative eﬃciency?
A) Consumers' maximum willingness to pay equals producers' minimum acceptable price for the last unit of output.
B) The sum of producer and consumer surplus is maximized.
C) The total revenue received by producers equals the total cost of production.
D) The marginal beneﬁt of the last unit produced equals the marginal cost of producing that unit.

Question

Quizplus · Accepted Answer

While total revenue and total cost being equal is a condition for achieving economic efficiency, it is not necessary for allocative efficiency. Allocative efficiency simply requires that the marginal benefit of the last unit produced equals the marginal cost of producing that unit, so that resources are allocated to their most valued use.

Which of the Following Conditions Does Not Need to Occur