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 economic theory, Between 2007 and 2009 the U.S. economy experienc...

Between 2007 and 2009 the U.S. economy experienced a severe recession. In an effort to stimulate the economy, the federal government passed a stimulus package. Explain the federal

Finding relate to economist''s traditional focus, Recently, a bank was tryi...

Recently, a bank was trying to decide what fee to charge for "expedited payments" - payments that the bank would transmit extra-speedily to enable customers to avoid late fees on c

Assignment help, Consider the economic data for Country A: Unemployment lev...

Consider the economic data for Country A: Unemployment level of 15% Natural Rate of Unemployment is 6%. Required Reserves is 25% C = 50 + 0.75Y; I = 600; G = 250 (note: T = 200 for

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

Economy is characterized, Suppose that the economy is characterized by the ...

Suppose that the economy is characterized by the following behavioral equations: C= 170 + 0.7YD I= 170 G= 150 T= 100 a. What does equilibrium output equal? Y=? b. What d

Profit maximizing firm, A profit maximizing firm has a production function ...

A profit maximizing firm has a production function such that: Y=K2L2 a) If P=10,rk=2,andWL=3 , what would be its optimum be? How can you show that it is a maximum? b) How

What is the emerging market economy, What is the emerging market economy ...

What is the emerging market economy According to Investopedia, Antoine W. Van Agtmael of International Finance Corporation of the World Bank first mentioned the term emerging m

Determine about the interest rates, Determine about the interest rates ...

Determine about the interest rates The interest rate may be fixed or floating. If it is fixed, you will pay the same percentage for the entire duration of the loan. With a floa

Business cycle, what is business cycle

what is business cycle

How to evaluate total savings, Q. How to evaluate total savings? Total...

Q. How to evaluate total savings? Total savings Total savings S(r) depends positively on the real interest rate Remember that total saving

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages