What is meant by allocative efficiency? How does a perfectly competitive firm achieve allocative efficiency?
What will be an ideal response?
Allocative efficiency refers to a state of the economy in which production reflects consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it. The price of a good represents the marginal benefit consumers receive from consuming the last unit of the good sold. Since perfectly competitive firms produce up to the point where the price of the good equals the marginal cost of the last unit produced, allocative efficiency is achieved.
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New money is created in the U.S. economy by
A) increased federal government expenditures. B) banks that create checkable deposits. C) the U.S. Treasury. D) U.S. Department of Mint. E) the U.S. Congress.
Unemployment that results from business recessions that occur when aggregate demand is insufficient to create full employment is
A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.
Which statement about the earned income tax credit is true?
a. Tax break amounts increase with the amount of income earned, up to a point. b. Tax break amounts decrease gradually with the amount of income earned. c. Tax break amounts are determined by the number and age of children in a family. d. Tax breaks are allowed for a maximum of five years.
_____ is any undesirable byproduct of production
Fill in the blank(s) with the appropriate word(s).