Allocative efficiency occurs when resources are distributed in a way that maximizes the overall satisfaction of society. This means that goods and services are produced at levels where the price reflects the true value to consumers, ensuring that resources are not wasted. In this state, the quantity of goods produced matches the quantity that consumers are willing to buy at that price. In a market achieving allocative efficiency, the marginal cost of producing an additional unit of a good equals the marginal benefit that consumers receive from it. This balance ensures that resources are used effectively, leading to optimal production levels and enhancing overall economic welfare.