what is allocative efficiency

Allocative efficiency refers to the optimal distribution of goods and services in an economy, taking into account consumer preferences. It is a state of the economy in which production is aligned with the preferences of society, and resources are used so that their marginal benefit to society is equal to their marginal cost. Allocative efficiency ensures that markets use scarce resources to make the products and provide the services that society demands and desires. An efficient market is one in which all pertinent data regarding the market and its activities is available, and it must be both productive and allocative efficient.