Allocative efficiency occurs when
A) all citizens have equal access to goods and services.
B) the most highly valued goods and services are produced.
C) goods and services are free.
D) the environment is protected at all costs.
E) production takes place at any point on the PPF.

Question

Quizplus · Accepted Answer

Allocative efficiency refers to producing the goods and services that are most highly valued by consumers. This means that resources are allocated efficiently to produce the goods and services that satisfy the wants and needs of consumers the most. This results in the highest level of consumer satisfaction and welfare. It does not necessarily mean that all citizens have equal access to goods and services, that goods and services are free, or that the environment is always protected at all costs. It also does not depend on where production takes place on the PPF, as long as it is producing the most highly valued goods and services.

Allocative Efficiency Occurs When