Two goods are said to be allocated efficiently between consumers when:
A)they are divided equally between them.
B)the marginal rates of substitution between the two goods are the same for both consumers.
C)further reallocations can make the consumers better off.
D)the consumers derive the maximum marginal utility from the consumption of both the goods.

Question

Quizplus · Accepted Answer

Efficient allocation between consumers occurs when their marginal rates of substitution (MRS) for the two goods are equal. This ensures that no further reallocation can improve one consumer's welfare without reducing the other's, indicating an optimal distribution of resources.

Two Goods Are Said to Be Allocated Efficiently Between Consumers