The necessary condition for allocative efficiency is that each commodity be produced in an amount that makes the marginal benefit to society of the last unit produced equal to the marginal cost to society of that last unit. The satisfaction of this condition in a market economy relies on the assumptions of:

Related MCQs

• The marginal condition for a Pareto-optimal allocation of factors requires that the ________ between labour and capital be equal for all commodities produced by different firms.
• When two commodities X and Y must be allocated among consumers, a necessary condition for distributive efficiency is that:
• Which of the following is not included in the assumptions of Clark’s marginal productivity of distribution
• The marginal condition for a Pareto-optimal or -efficient distribution of commodities among consumers requires that the MRS between ______ be equal for all consumers.
• If an economy operates on its production possibility curve, then the allocation of resources in that economy satisfies:
• When a firm’s average revenue is equal to its average cost, it gets ________.
• Which of the following is not a benefit of international trade?
• If any policy change benefits any one section of the society (gainers) to such an extent that it is better off even after the payment of compensation to the other sections of the society (losers) out of the benefits received, then that change leads to
• According to AC Pigou, any reorganization of the economy which increases the share of the poor without reducing the national income is also considered an
• A closed economy is one in which: