Question

Does the market system result in allocative​ efficiency? in the long​ run, perfect competition
a. does not result in allocative efficiency because price does not equal the marginal benefit consumers receive from consuming the last unit of the good sold.
b. results in allocative efficiency because firms produce where the marginal benefit consumers receive from consuming the last unit of the good sold is greater than marginal cost.
c. results in allocative efficiency because firms produce where price equals marginal cost.
d. does not result in allocative efficiency because firms produce an identical product that offers consumers no variety.
e. does not result in allocative efficiency because firms enter and exit until they break even where price equals minimum average cost.

Answer 1

C.

Allocative efficiency in simple terms basically means there is no wastage, therefore if producers produce at price equals marginal coat, they are producing at the point where consumers are willing to pay that final price. Refer to the poorly drawn diagram for reference.