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Allocative efficiency is a state of the economy in which production is aligned with the preferences of consumers and producers; in particular, the set of outputs is chosen so as to maximize the social welfare of society. [1]
When drawing diagrams for businesses, allocative efficiency is satisfied if output is produced at the point where marginal cost is equal to average revenue. This is the case for the long-run equilibrium of perfect competition. Productive efficiency occurs when units of goods are being supplied at the lowest possible average total cost.
The production function is one of the key concepts of mainstream neoclassical theories, used to define marginal product and to distinguish allocative efficiency, a key focus of economics. One important purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution ...
Bergson demonstrated that economic efficiency conditions could be precisely formulated without fully specifying the underlying social welfare function. By postulating W as W(UA, UB) and assuming W to be a positive function of each individual's utility, it was shown that maximum welfare occurred when allocative efficiency was achieved, and the ...
Being on the curve might still not fully satisfy allocative efficiency (also called Pareto efficiency) if it does not produce a mix of goods that consumers prefer over other points. Much applied economics in public policy is concerned with determining how the efficiency of an economy can be improved. Recognizing the reality of scarcity and then ...
Others with a family to support, of course, are quite concerned about what’s next about their financial future. Right now, Bernard said, he's looking around for opportunities, hoping to stay ...
Other concepts include functional/operational efficiency, which is inversely related to the costs that investors bear for making transactions, and allocative efficiency, which is a measure of how far a market channels funds from ultimate lenders to ultimate borrowers in such a way that the funds are used in the most productive manner.
The Department of Government Efficiency, or DOGE, headed by billionaires Elon Musk and Vivek Ramaswamy, says it is hiring "a very small number" of full-time, salaried positions. The solicitation ...