To Determine How Much of a Good to Produce to Achieve

question 342

Multiple Choice

To determine how much of a good to produce to achieve allocative efficiency,we

• A) construct a production possibilities frontier and choose the midpoint.
• B) construct a production possibilities frontier and choose any point on it.
• C) must produce on the PPF and at the point where the marginal benefit and marginal cost of the good are equal.
• D) must produce on the PPF and at the point where the marginal benefit exceeds by any amount the marginal cost of the good.
• E) must produce on the PPF and at the point where the marginal benefit exceeds by as much as possible the marginal cost of the good.