Allocative efficiency does not necessarily mean:
A)a socially desirable distribution of resources.
B)zero economic profits for firms.
C)price is equal to marginal cost.
D)price is equal to average costs.
E)there are many firms in the industry.

Question

Quizplus · Accepted Answer

Allocative efficiency only ensures that resources are allocated to produce goods and services up until the point where the benefits gained from producing additional units are equal to the costs of production. It does not consider whether the distribution of resources is socially desirable or just.

Allocative Efficiency Does Not Necessarily Mean