Answer Happy

Question 10 How would you explain allocative efficiency in a purely competitive market structure? Firms ensure that they produce enough quantity so that everyone who wishes to buy the product can do so. Allocative efficiency is a concept involving only two goods, so it cannot be applied to a perfectly competitive market.. Firms produce that quantity where the price consumers pay equals the cost to society to produce it. Firms produce the quantity where the price consumers pay is less than the cost to society to produce it.