When the price equals the marginal cost, the production is at its most optimal level for allocation.
Efficiency, whether allocational or allocative, is the quality of a market where all products and services are efficiently divided among consumers in an economy.
It happens when parties can use the precise and easily accessible information represented in the market to decide how to employ their resources.
In a perfect market, a business is allocatively efficient when its price (P = MC) equals its marginal costs.
The level of production where marginal cost and marginal gain are as near to each other as feasible is known as allocation efficiency.
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