Resources are efficiently allocated when production occurs where:

• A. marginal cost equals average cost
• B. average cost equals average revenue
• C. marginal benefit equals marginal cost
• D. total revenue equals total cost

Answer: (C)

Verified step by step guidance

1. Understand the concept of efficient resource allocation in microeconomics, which occurs when the production decision maximizes net benefits to society.
2. Recall that marginal cost (MC) is the additional cost of producing one more unit, and marginal benefit (MB) is the additional benefit gained from consuming one more unit.
3. Recognize that efficiency in production is achieved when the marginal benefit of producing an additional unit equals the marginal cost of producing that unit, i.e., when \(\text{MB} = \text{MC}\).
4. Note that other conditions like marginal cost equaling average cost or average cost equaling average revenue do not necessarily guarantee efficient allocation of resources.
5. Therefore, the key condition for efficient allocation is that marginal benefit equals marginal cost, ensuring that resources are neither overused nor underused.