An equilibrium in which scarce societal resources are allocated to the production of various goods and services up to the point where the cost of the resources equals the benefit society reaps from their use is:
A) productive efficiency.
B) allocative efficiency.
C) true efficiency.
D) product efficiency.

Question

Quizplus · Accepted Answer

Allocative efficiency involves using scarce resources to produce the combination of goods and services that maximizes society's satisfaction. This means that resources are being allocated to the production of goods and services up to the point where the cost of producing an additional unit of a specific good or service is equal to the benefit society receives from consuming it. This results in an optimal distribution of resources and maximizes the overall welfare of society.

An Equilibrium in Which Scarce Societal Resources Are Allocated to the Production