Resource Use Is Allocatively Efficient

question 78

Multiple Choice

Resource use is allocatively efficient

• A) whenever marginal cost exceeds marginal benefit.
• B) whenever marginal benefit exceeds marginal cost.
• C) when marginal benefit equals marginal cost.
• D) when the maximum possible quantity is being produced.

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Definitions:

Perfect Information

A situation in which all participants have access to all relevant information in a market or decision-making situation.

Prior Probabilities

The probabilities of possible outcomes based on existing knowledge before the arrival of new evidence.

Perfect Information

A state in which all participants in an economic market have complete and instantaneous knowledge of all market aspects that affect their transactions.

Expected Opportunity Loss

The potential loss in value for not choosing the best course of action in decision-making under uncertainty.