Allocative Efficiency Occurs Only at That Output Where

question 12

Multiple Choice

Allocative efficiency occurs only at that output where

• A) marginal benefit exceeds marginal cost by the greatest amount.
• B) consumer surplus exceeds producer surplus by the greatest amount.
• C) the combined amounts of consumer surplus and producer surplus are maximized.
• D) the areas of consumer and producer surplus are equal.

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Definitions:

Operating Expenses

Costs incurred during the normal operations of a business, excluding the cost of goods sold.

Sales

The transactions involving the exchange of goods or services for money, constituting the primary revenue source for most businesses.

Sales Discount

A reduction in the price of goods or services offered by a seller to a buyer, often to incentivize the purchase or prompt payment.

Merchandise

Goods or products that are bought and sold in business transactions.