Allocative eﬃciency occurs where (for the last unit) maximum willingness to pay exceeds minimum
acceptable price by the greatest amount.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the price of the good equals the marginal cost of production, meaning the value consumers place on a good matches the cost of producing it, not when willingness to pay exceeds the minimum acceptable price by the greatest amount.

Allocative Eﬃciency Occurs Where (For the Last Unit) Maximum Willingness