Resource use is allocatively efficient if the
A) marginal cost of what the resource produces is equal to the marginal benefit of what is produced.
B) total cost of what the resource produces is less than the total benefit of what is produced.
C) total cost of what the resource produces is equal to the total benefit of what is produced.
D) marginal benefit of what the resource produces has diminished to zero.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the marginal cost of producing a good or service is equal to the marginal benefit to society of having that good or service produced. This means that producing one more unit of the good or service would not increase the overall benefit to society, and producing one less unit of the good or service would result in a net loss to society. Therefore, choice A is the correct answer.

Resource Use Is Allocatively Efficient If the