Markets achieve an efficient allocation of resources when
A)public goods are produced.
B)external benefits are present.
C)the market is a monopoly.
D)subsidies are paid to producers.
E)marginal social benefit equals marginal social cost.

Question

Quizplus · Accepted Answer

An efficient allocation of resources occurs when the marginal social benefit equals the marginal social cost, meaning that the production of one additional unit of a good or service provides the same benefit to society as the cost it imposes. This is known as allocative efficiency and is the goal of market mechanisms. The other options do not necessarily lead to an efficient allocation of resources.

Markets Achieve an Efficient Allocation of Resources When