When the Market Achieves Allocative Efficiency

question 9

Multiple Choice

When the market achieves allocative efficiency,

• A)marginal benefit equals marginal cost.
• B)marginal cost is at its minimum.
• C)marginal cost minus marginal benefit is positive.
• D)marginal benefit minus marginal cost is positive.
• E)marginal benefit is at its maximum.

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Definitions:

Technological Advance

(1) An improvement in the quality of existing products, the invention of entirely new products, or the creation of new or better ways of producing or distributing products. (2) Any improvement in the methods by which resources are combined such that the same quantity of inputs can be made to yield a combination of outputs that is preferred to any combination of outputs that was previously possible.

Freedom of Choice

The right of individuals to make decisions for themselves without undue government restriction.

Society's Wants

The collective desires and needs of a community or society that drive demand and economic activity.