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
WTO Negotiations: As is obvious from the above explanation  that India has favoured multilateral trade reforms ever since the time of GATT (1947) to WTO (1995). Currently WTO

Q. Explain about Household savings? Remember that consumption may refer to observed consumption as well as to demand for consumption. The same is true for 'household savings',

Describe how price level evolves over time Using the time series we can study how price level evolves over time. If all prices rose by 2% during one month, price level would ri

An effort to reduce energy costs, a major university has installed more efficient lights as well as automatic sensors that turn the lights off when no movement is present in a room


What are the 4 scarce, factors of production and what is a description of each of them. What are the costs to these resources?

For a single nonprofit provider, describe an output-maximizing model to predict supplier behavior.

The total value of loan in an economy is Rs. 400 million and the reserve ratio is 20 per cent. An enhance of Rs. 15 million in the money which the public keeps in commercial ba

Climate and terrain in several South American countries are conducive to growing coffee efficiently. While other countries can grow coffee, they are not as efficient and effective

Demand: Demand is quantity of a good buyer who wishes to purchase at each conceivable price. The law of demand explains us that if the price of certain commodity increases,