Market failure and externalities

An economy achieves allocative efficiency when:

the average cost of production is minimised across all firms

resources are allocated such that marginal social benefit equals marginal social cost

there is an equal distribution of income and wealth among all consumers

the economy is producing at any point along its production possibility frontier

An economy achieves allocative efficiency when:

the average cost of production is minimised across all firms

resources are allocated such that marginal social benefit equals marginal social cost

there is an equal distribution of income and wealth among all consumers

the economy is producing at any point along its production possibility frontier

Market failure and externalities Questions