If there is allocative efficiency in a purely competitive market for a product, the maximum price consumers are willing to pay is
A)less than marginal benefit.
B)greater than marginal cost.
C)equal to the amount of efficiency or deadweight losses.
D)equal to the minimum price producers are willing to accept.

Question

Quizplus · Accepted Answer

In a purely competitive market, allocative efficiency occurs when the price consumers are willing to pay (which reflects the marginal benefit) is equal to the minimum price producers are willing to accept (which reflects the marginal cost). This ensures that resources are allocated in the most efficient manner, with no underproduction or overproduction relative to what is socially optimal.

If There Is Allocative Efficiency in a Purely Competitive Market