Allocatively Efficient Level of Output

Definition

The allocatively efficient level of output is the point at which resources are allocated in a way that maximizes society's overall welfare. It occurs when the marginal benefit to society equals the marginal cost.

Related terms

Marginal Benefit: The additional benefit gained from consuming one more unit of a good or service.

Marginal Cost: The additional cost incurred from producing one more unit of a good or service.

Social Welfare: The overall well-being or satisfaction of society as a whole.