Allocative Efficiency Means That

question 158

Multiple Choice

Allocative efficiency means that

• A)firms have maximized production
• B)all mutually beneficial trades have taken place
• C)the next unit sold will increase total surplus
• D)producer surplus is maximized
• E)no mutually beneficial trades have occurred

---

Definitions:

Economic Gains

Increases in economic welfare, often measured by improvements in income, production, or satisfaction levels.

Salsa Manufacturers

Companies or entities involved in the production and distribution of salsa, a type of spicy sauce.

Law of Supply

The economic principle stating that as the price of a good increases, the quantity supplied of the good also increases, ceteris paribus.

Law of Demand

An economic principle stating that as the price of a good or service decreases, the quantity demanded increases, and vice versa, holding other factors constant.