Resource Use Is Allocatively Efficient

question 99

Multiple Choice

Resource use is allocatively efficient

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

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Definitions:

Variable Cost

Financial outlays that change directly with changes in production or sales amounts, such as direct labor and raw materials.

Incremental Manufacturing Cost

The additional costs incurred when increasing production by one additional unit.

Production Increase

Refers to the rise in the quantity of goods or services that a company produces over a given period.

Period Costs

Expenses that are not directly tied to the production process and are charged to the period in which they are incurred.