Editing Allocative efficiency (section)

{{short description|When production relates to consumer preferences in an economy}}
'''Allocative efficiency''' is a state of the economy in which production is aligned with the preferences of consumers and producers; in particular, the set of outputs is chosen so as to maximize the [[Economic surplus|social welfare]] of society.<ref> Anderson, D. (2019). Environmental Economics and Natural Resource Management, [https://www.routledge.com/Environmental-Economics-and-Natural-Resource-Management-5th-Edition/Anderson/p/book/9780815359036] Routledge, New York.</ref> This is achieved if every produced good or service has a [[marginal benefit]] equal to or greater than the [[marginal cost]] of production.