Which of the following conditions does not need to occur for a market to achieve allocative efficiency?

A) Consumers' maximum willingness to pay equals producers' minimum acceptable price for the last unit of output.
B) The sum of producer and consumer surplus is maximized.
C) The total revenue received by producers equals the total cost of production.
D) The marginal benefit of the last unit produced equals the marginal cost of producing that unit.

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Riley Wallace · Accepted Answer

Final Answer : C, Explanation :  Allocative efficiency is achieved when the marginal benefit of the last unit produced equals the marginal cost of producing that unit. While conditions A, B, and D relate to this concept, condition C does not necessarily need to be true for allocative efficiency to occur. Total revenue received by producers may be larger than total cost of production and still achieve allocative efficiency, as long as the marginal benefit equals the marginal cost.

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