In microeconomics, the optimal allocation of resources is found when:

• A. all firms produce at the lowest possible average cost
• B. resources are allocated so that marginal benefit equals marginal cost
• C. total output is maximized regardless of consumer preferences
• D. income is distributed equally among all individuals

Answer: (B)

Verified step by step guidance

1. Understand the concept of optimal allocation of resources in microeconomics, which refers to the most efficient distribution of resources to maximize overall welfare.
2. Recall that the condition for optimal allocation is when the marginal benefit (MB) of consuming a good or service equals the marginal cost (MC) of producing it, ensuring resources are used where they are most valued.
3. Recognize that producing at the lowest possible average cost relates to productive efficiency but does not guarantee allocative efficiency, which is about matching supply with consumer preferences.
4. Note that maximizing total output without considering consumer preferences may lead to inefficiency because it ignores the value consumers place on different goods.
5. Understand that equal income distribution is a normative goal related to equity, not necessarily efficiency or optimal resource allocation in microeconomics.