Allocative efficiency occurs whenever
A) consumer surplus is maximized.
B) it is impossible to produce a net benefit for society by changing the combination of goods and services produced.
C) firms have maximized their profits.
D) it is impossible to make someone in society better off without making someone else worse off.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the combination of goods and services produced is such that it is impossible to improve the well-being of any individual in society without causing a reduction in the well-being of another individual. In other words, it occurs when production is optimized in a way that the marginal benefit equals the marginal cost of producing each good or service. This leads to the maximum net benefit for society, and any further reallocation of resources would result in a decrease in overall welfare.

Allocative Efficiency Occurs Whenever