Question

If there is allocative efficiency in a purely competitive market for a product, the maximum price consumers are willing to pay is?

Answer 1

If there is allocative efficiency in a purely competitive market for a product, the maximum price consumers are willing to pay is equal to the minimum price producers are willing to accept.

An efficient market exhibits allocative efficiency, also known as allocative efficiency, when resources are allocated in a way that maximizes utility for all participants.

The term "allocative efficiency" refers to the extent to which a given economy's resources are allocated effectively to meet the needs of its consumers and producers. When products, services, and capital are allocated and dispersed efficiently, everyone benefits.

Efficient markets have allocational or allocative efficiency, which ensures that all products and services are allocated to consumers in the most beneficial way possible. It occurs when participants in the market have access to reliable information that allows them to make educated choices about the allocation of their resources.

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