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

Calculate variable unit costs and total annual costs, How do you calculate ...

How do you calculate variable unit costs and total annual costs? Ans) Annual units sold, 1000. Raw materials yearly cost 650. Building rent yearly cost 9000. If sales volume enh

FREE TRADE AND PROTECTIONISM, WHY IS INTERNATIONAL TRADE IMPORTANT IN SOUTH...

WHY IS INTERNATIONAL TRADE IMPORTANT IN SOUTH AFRICA

Tennis club, Suppose you belong to a tennis club that has a monthly fee of ...

Suppose you belong to a tennis club that has a monthly fee of $75 and a charge of $5 per hour to play tennis.

Negative performances of the economy, An advantage of observing statistics ...

An advantage of observing statistics from this range is that it encapsulates both positive and negative performances of the economy helping to produce a much more accurate insight

What is use of long-run average total cost curve in output, What is the use...

What is the use of long-run average total cost curve in the producing output? The long-run average total cost curve demonstrates the relationship in between output and average t

State the term fall in the exchange rate, state the term fall in the exchan...

state the term fall in the exchange rate A fall in the exchange rate must make UK exports price competitive in international markets and increase demand for them. This should

Why do some countries have a high real per capita income, Why do some count...

Why do some countries have a high real per capita income? High standard of living within the industrialized nations consider to be largely because of the high productivity of

Various types of sports clothing, ABC Sports, a store that sells various ty...

ABC Sports, a store that sells various types of sports clothing and other sports items, is planning to introduce a new design of Arizona Diamondbacks' baseball caps. A consultant h

Reserves and a reserve requirement, If the Banking system has $500,000 in d...

If the Banking system has $500,000 in demand deposit liabilities, $125,000 in total reserves and a reserve requirement of 15%: What is the maximum amount by which the money supply

Budget deficit, A budget deficit is defined as: A. accumulated surpluses mi...

A budget deficit is defined as: A. accumulated surpluses minus accumulated deficits. B. a shortfall of revenues compared to expenditures. C. accumulated deficits minus accumulated

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages