When a Society Achieves Allocative Efficiency,it

question 70

Multiple Choice

When a society achieves allocative efficiency,it

• A) is not achieving production efficiency.
• B) is producing that combination of goods and services that society values most highly.
• C) might or it might not be producing at a point on society's PPF.
• D) is producing a combination of goods and services whose marginal cost exceeds their marginal benefit.
• E) is producing the combination of goods and services for which marginal benefit exceeds marginal cost by as much as possible.

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Definitions:

Normal Profit

The minimum level of profit needed for a company to remain competitive in the market, factoring in the cost of opportunity.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and firms in a competitive market make just enough profit to cover their costs.

Marginal Cost

The increase or decrease in the total cost incurred from producing one additional unit of a good or service.