Paper 1 · allocative efficiency
Allocative efficiency is realised when
Athe economy is operating at minimum cost.
Ba gain by one does not diminish others' welfare.
Csociety gets as much from production as it puts in.
Dthe economy is operating at the production possibility curve.
Explanation: Allocative efficiency occurs when resources are distributed so that society gets as much value from production as it puts in (P = MC). The marking scheme confirms answer C.
ZIMSEC Economics Paper 1, November 2009, Q5
