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

Formulate null and alternative hypotheses to test analysts, Many investors ...

Many investors and financial analysts believe the Dow Jones Industrial Average (DJIA) provides a good barometer of the overall stock market. On January 31, 2006, 9 of the 30 stocks

Perfect competition, c) Explain why perfectly competitive markets lead to a...

c) Explain why perfectly competitive markets lead to an allocatively efficient allocation of resources in the long run

Free trade and protectionism, why is international trade important to sa

why is international trade important to sa

Why does yield on UK gov bond go up when stock markets down?, Doesn''t mone...

Doesn''t money move out of stock markets into bond? If more people buy bonds does this not push bond prices up and yields down? My question is about this quote from the Gardian tod

Firm wants to sell goods, If a firm wants to sell goods more often, would t...

If a firm wants to sell goods more often, would they prefer to produce a high quality good that will not wear out or one that will wear out faster. For example, what is the 'life e

Supply and Demand, During the 1990s, technological advance reduced the cost...

During the 1990s, technological advance reduced the cost of computer chips. Explain, with the use supply and demand diagrams, how the following markets are affected in terms of pr

Graph the industry demand and supply, Construct two graphs that exhibit equ...

Construct two graphs that exhibit equilibrium in the petrol market - assume that there are no taxes. Clearly label the equilibrium values. (a) Graph the AFC, AVC, ATC, and MC fu

Diminishing scale output, what is meant by diminishing scale output

what is meant by diminishing scale output

Per year interest rate, For an interest rate of 12% per year compounded con...

For an interest rate of 12% per year compounded continuously, find (a) the nominal rate per year, (b) the nominal rate per quarter, (c) the effective rate per quarter, and (d) the

Policy position by utilizing the examples, While referring to the "EYE on Y...

While referring to the "EYE on YOUR LIFE" section on page 183 of the textbook, apply this concept to your life. Develop your own policy position on price floors and price ceilings.

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages