Allocative Efficiency Is Achieved When the Marginal Benefit of a Good

question 96

Multiple Choice

Allocative efficiency is achieved when the marginal benefit of a good

• A) exceeds the marginal cost by as much as possible.
• B) exceeds the marginal cost, but not by as much as possible.
• C) is less than the marginal cost.
• D) equals the marginal cost.
• E) equals zero.

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Definitions:

Principal

The main party to a transaction, who has the primary responsibility, or in an agency relationship, the person for whom the agent acts.

Agent

A person authorized to act on behalf of another (known as the principal) in business transactions or other matters.

Transaction

An agreement or exchange between two or more parties that entails a transfer of goods, services, funds, or any other item of value.

Liable

Legally responsible or obligated to someone else under the law.