Allocative efficiency concerns
A)producing outputs at lowest possible cost.
B)the allocation of resources such that total economic surplus is maximized.
C)encouraging monopoly if it generates innovation.
D)discouraging all monopoly firms.
E)the equitable distribution of resources.

Question

Quizplus · Accepted Answer

Allocative efficiency is concerned with the efficient allocation of resources in a way that maximizes total economic surplus, which is the difference between the social value of the product and the cost of producing it. This means finding a balance between producing goods and services at the lowest possible cost and ensuring that they are being allocated to the consumers who value them the most. This leads to a more efficient use of resources, increased productivity, and higher overall welfare. Encouraging monopolies or attempting to distribute resources equally may not necessarily lead to allocative efficiency.

Allocative Efficiency Concerns