Difference between productive and allocative efficiency, Macroeconomics

Assignment Help:

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)

 


Related Discussions:- Difference between productive and allocative efficiency

Classical model, using a graph of the classical labour market, illustrate t...

using a graph of the classical labour market, illustrate the effects of a real wage existing in the market that is lower than the equilibruim real wage.what will eventually happen

Overnight target rates and inflation, Overnight target rates and inflation ...

Overnight target rates and inflation One of the major targets of every central bank is a low and stable inflation. Its main control variable is the overnight interest rate tar

Critique the effectiveness of the model, Discuss how decisions are made in ...

Discuss how decisions are made in your workgroup. Which model is used for what situation? Be sure to provide specific examples of at least three situations and what model was used

Testing the hypothesis, An effort to reduce energy costs, a major universit...

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 is gdp, Assuming an economy with no government and no foreign trade. M...

Assuming an economy with no government and no foreign trade. Measure GDP for the following output scenario: There are three firms: firm A is a minning company, firm B is a stee

Impact of property crime to increase, Which of the following will cause pro...

Which of the following will cause property crime to increase? a) An increase in jail terms. b) A decrease in personal incomes. c) An increase in the probability of arrest.

Newspaper vending machines, Newspaper vending machines are designed so that...

Newspaper vending machines are designed so that once you have paid for one paper; you have access to all the papers in the machine and could take multiple papers at a time. However

What is privatization?, Privatization is the move of ownership from the pub...

Privatization is the move of ownership from the public sector (government) to the private sector (business).

Relate overnight rate with money supply, Relate overnight rate with money s...

Relate overnight rate with money supply When the overnight interest rate decreases, the money supply increases When the overnight interest rate increases, the money supply d

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd