For allocative efficiency to hold,
A) average total cost is minimized in production.
B) average variable cost is minimized in production.
C) price must equal marginal revenue of the last unit sold.
D) price must equal the marginal cost of the last unit produced.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the price of a good or service is equal to the marginal cost of producing that last unit, ensuring that resources are allocated in the most efficient manner across the economy.

For Allocative Efficiency to Hold