What Is Allocative Efficiency

question 11

Multiple Choice

What is allocative efficiency?

• A)It refers to a situation in which resources are allocated to their highest profit use.
• B)It refers to a situation in which resources are allocated such that goods can be produced at their lowest possible average cost.
• C)It refers to a situation in which resources are allocated such that the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it.
• D)It refers to a situation in which resources are allocated fairly to all consumers in a society.

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Definitions:

Cycle Inventory

The portion of inventory available to meet normal demand during an ordering cycle.

Demand

The quantity of a good or service that consumers are willing and able to purchase at a given price.

Cycle Inventory

The average amount of inventory kept on hand to meet normal demand between the receipt of inventory deliveries.

Physical Inventory

The process of counting and verifying actual merchandise or stock in a business, usually for accounting accuracy and inventory management.