Question

Dr. Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services. What would Dr. Goldfinger need to do to try to achieve allocative efficiency?

A) invest in companies that produce goods and services based on consumer preferences
B) invest in companies that produce goods and services at the lowest possible cost
C) invest in companies that fairly distribute their products and services
D) invest in companies that produce up to the point where the marginal cost of the last unit

Answer 1

A) invest in companies that produce goods and services based on consumer preferences

Explanation:

Dr. Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services.

So, he should do the following in order to achieve allocative efficiency:

Invest in companies that produce goods and services based on consumer preferences.

In allocative efficiency, the production represents consumer preferences. Also, here the price of a service is equal to the marginal cost of production.