Explain the concept of allocative efficiency

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Assignment:

Question 1- The opportunity cost (or marginal cost) to society of providing a single MRI scan is essentially zero. Yet, hospitals charge substantially more. The result is the creation of dead weight loss. Based on this example, explain the concept of allocative efficiency.

Question 2- Referring to question 4, how does the existence of this dead weight loss relate to the market structure applicable to hospitals. It would be easiest to answer this by explaining how another market structure might result in a different outcome.

These are two connecting questions from my general economics class. I am not sure how to answer them and I need help. Thank you so much in advance! If you help me, you are a life saver!

Reference no: EM133255496

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