Difference between productive and allocative efficiency, Macroeconomics

Explain the difference between productive and allocative ( economic ) efficiency.

  • Explanation of productive efficiency, e.g. output at AC minimum
  • Define to the effect that this shows that all factors (fixed and variable) are being utilised to the utmost efficiency when average costs are at the lowest point
  • Definition of allocative efficiency, e.g. P = MC
  • Explanation that allocative efficiency means that welfare is maximised - the firm is producing the last possible unit since the market price means that there is a demand for it at that price
  • illustrating both concepts using a unit cost picture (PCM)

 

Posted Date: 7/11/2013 5:23:49 AM | Location : United States







Related Discussions:- Difference between productive and allocative efficiency, Assignment Help, Ask Question on Difference between productive and allocative efficiency, Get Answer, Expert's Help, Difference between productive and allocative efficiency Discussions

Write discussion on Difference between productive and allocative efficiency
Your posts are moderated
Related Questions
Fiscal policy is the program of government’s with respect to the amount and composition of (i) expenditure: the purchase of commodities and services, and spending in the form of su

Suppose new instruments for a firm cost $18,000 along with an additional installation fee of $2,000, both of that are depreciable. Complete the depreciation schedule display below

Q. Explain the classical growth theory? Production function won't provide us with a theory or explanation of growth. It's only a convenient tool that helps us breaking down gro


Loretta liver more labs purchased R&D equipment costing $200000.00 The interest rate is 5%,salvage value is 20000.00 and the expected life is 10 years. Compute the PW of the deprec

Determine the GDP price index for 1984, using 2005 as the base year

The economy of Macroland has a balanced budget with fixed government expenditures G = 150 and T = 150. Investment is autonomous: I = 200. The consumption function is the foll

Define the tools of Competitive market. Competitive market: The supply and demand model a. The demand curve b. The supply curve c. Factors which cause the demand cu

Write a one paragraph summary and three paragraphs that take the information in the article and relate it specifically to the circular flow model and the supply and demand curves.

In 1999 Mercedes-Benz USA adopted a new pricing policy, which it called NFP (negotiation-free process), that sought to eliminate price negotiations between customers and new-car de