Allocative efficiency is achieved when the marginal benefit of a good
A) exceeds the marginal cost by as much as possible.
B) exceeds the marginal cost, but not by as much as possible.
C) is less than the marginal cost.
D) equals the marginal cost.
E) equals zero.
D
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Which of the following is most likely to lead to an economic contraction?
a. A decrease in the average price level b. An increase in aggregate supply c. A decrease in aggregate demand d. A decrease in taxes e. An increase in transaction demand for money
If 20 smoothies are sold at a market price of $5.50 each, then
a. there must not be an excess supply of smoothies b. selling the 21st smoothie would be a Pareto improvement c. the market must be perfectly competitive d. the value to some individual of the 20th smoothie is $5.50 e. there must be an excess demand for smoothies