Explain what is meant by allocative efficiency and under what conditions is this efficiency achieved? And explain what is meant by efficiency in production, and under what conditions is this efficiency achieved?

Explain what is meant by allocative efficiency and under what conditions is this efficiency achieved? And explain what is meant by efficiency in production, and under what conditions is this efficiency achieved?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 5SCQ: If two painters can paint 200 square feet of wall in an hour, and three painters can paint 275...

See similar textbooks

Related questions

Q: (I) Compute the marginal rates of substitution of each firm at the Nash equilibrium. Is the Nash equ...

A: In a strategic game of wins and losses, comprising two players whose only objective is to maximise t...

Q: How transactions between suppliers and users of funds take place. How would you prove that there was...

A: The price is what suppliers tend to receive and what the demanders tend to pay in any market. People...

Q: A family of four has an income of $15,000 today and will earn $24,000 tomorrow. i). If the family ...

A: Income and distribution effet is the changiñg of the faste and preference of an induolial on the bas...

Q: At the Punjab Bakery, two workers can decorate 14 cakes in an hour and three workers can decorate 18...

A: According to the law of diminishing returns, the marginal product initially increases as more units...

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...

A: Hi! Thank you for the question. As per the honor code, We’ll answer the 7th question. Please submit ...

Q: 1) Suppose the production function for widgets is given by: q= KL – 0.8K² – 0.2L². a.) Suppose K=10,...

A: 1) Production Function : q=KL-0.8K2-0.2L2 a) K=10 q=(10)L-0.8(10)2-0.2L2 q=10L-80-0.2L2 Maximizi...

Q: What is seperating equilibrium? Small answer with an example and diagram

Q: "In terms of condiments and spices locals normally consume chive and celery together. For root crops...

A: Other things, except for own price, affect the quantity of demand, is called non-determinants of dem...

Q: In a world where the only goods are cell phones and cereal: Jennereelam can produce: 80m kilos of ce...

A: According to the question given, Jennereelam can produce 80 million kilos of cereal and 200 thousa...

Q: The current account represents the difference between gross national disposable income and: a. domes...

A: The two-component of the balance of payment BOP of a country is the current account and the capital ...

Q: The market equilibrium quantity is tons of steel, but the socially optimal quantity of steel product...

A: Market Equilibrium quantity occurs when Demand (Private Value) is equal to the Supply (Private cost)...

Q: The business manager of a large company wants to check the inventory records against the physical in...

Q: Each firm in a constant costs competitive industry has C = 2q2 + 2 and MC = 4q. Demand is Q = 400 - ...

A: Market currently in the long run because we do not have number of firms, we cannot find the supply f...

Q: Why is investment an important component in a country's output? what theory supports investment in ...

A: To spur economic growth, a country must acquire or mobilise funds in order to invest in the economy'...

Q: Explain the hedonistic wage function in short with a diagram

Q: O The supply side of the economy, along with Its output, determines the productive capacity O The le...

A: At equilibrium the aggregate demand and aggregate supply are equal and determined the price level at...

Q: We consider a CES production function. Y = A + (1 – a)L̟º Q1: As o → 1, prove the Cobb-Douglas produ...

A: Given production function Yt=AαKtσ-1σ+(1-α)Ltσ-1σσσ-1

Q: Tom's utility function is u(x,x,) = In(x,)+2 In(x,) and Sally's utility functic u(x,,x2) = min{x, } ...

A: utility function is an important concept that measures preferences over a set of goods and services....

Q: 29. In the simple deposit expansion model, if the Fed purchases $100 worth of bonds from a bank that...

A: Fractional reserve banking is a prevalent practice in most countries worldwide and is referred to as...

Q: What happens to interest rates in the market when bond prices fluctuate a lot

A: Bond price:- Bond price can be explained as discounted present value of a bond's anticipated cash fl...

Q: How useful is the dual labor market perspective?

A: The hypothesis that the American economy, or labour market, is divided into two categories: the Prim...

Q: ADVERTISING & SALES 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 100 200 300 400 500...

A: Given: A graph is given where there is sales measured on the x axis and advertising is measured on t...

Q: Suppose that there are two firms and they each have MC=2. No fixed costs. They each produce a slight...

Q: The below graph shows the market of computers. The equilibrium is at point "E": Price $700 650 600 5...

A: Total surplus is the sum of consumer surplus and producer surplus.

Q: Decreasing marginal returns occur in the short run as more labor is hired to work in fixed sized pla...

A: As more and more labors are hired, the marginal returns starts to fall.

Q: 5. Consider the accompanying breakeven graph for an investment, answer the following questions. a) G...

A: Since you have provided multiple subpart question, we will solve the first three subpart for you. If...

Q: Table showing Total Cost and Quantity of Output Quantity of Total Average Total Marginal Cost Output...

A: Average total cost of the total cost per unit of output. Marginal cost is the change in total cost w...

Q: Explain labour demand in short with a diagram

A: In economics, demand is the term that is used to define the need/requirement of a product or a servi...

Q: Write down the factors affecting supply. Which of the following factors will cause the following pro...

A: Disclaimer: Since you have posted a multipart question, I am providing you with the answer to the fi...

Q: Consider again the two schemes. Which scheme will the farmers prefer? Consider again the two schemes...

A: A price floor is a minimum price set on goods and services usually determined by the government.

Q: In a perfectly competitive market, the market demand and supply curves are given by Q, = 1000 - 10P,...

A: A perfectly competitive firm is a price taker as there are large number of firms selling identical g...

Q: Suppose aggregate labour supply is measured as aggregate number of hours worked (L) given wage (w). ...

Q: How do the economic sectors differ?

A: Economic sectors refers to various different sectors of the economy each dealing with different type...

Q: How are the slopes of the IS and LM curves determined? Explain with graph

A: IS curve refers to the goods market equilibrium curve which is explained by the Keynesian model. The...

Q: Average product is equal to A) marginal product + total product. B) total product + marginal product...

A: When talking about average of any economic variable or measurement, it can be said that it explains ...

Q: Why are monopolies considered an abuse of power?

A: Pricing power is frequently restricted by rivals and the prospect of customers switching to alternat...

Q: Why can welfare programs, if not managed correctly, create work disincentives?

A: Welfare is a concept that aims to support the poorest in our society so that they are able to meet b...

Q: L^aK^1-a Suppose labor is fixed at some level -, a = 0.5, and A = 1. Calculate K* )What is T C* ? -)...

A: The fixed cost does not change with change in the level of output.

Q: 2) The general Cobb-Douglas production function for two inputs is given by: q = f (k, l) = AKªIB_whe...

Q: Out of 20,000 customers' ledger accounts, a sample of 600 accounts was taken to test ´New the accura...

Q: Question 1 There are four utility functions defined as follows: U(x,y) 5 ln r +6 ln y U2(x, y) = r+y...

A: Solution1: We have U1x,y=5lnx+6lny .... (1) U3(x,y)=x5y6 .... (2) and U4=x...

Q: Suppose that Bob and Jimmy both have 10 hours of time that they can use to do one of two things: mak...

A: Given information: Number of hours = 10 Bob: 15 Hamburgers and 3 plates of Pasta per hour Jimmy : 8 ...

Q: According to the Coase theorem, private parties can solve the problem of externalities if Group of a...

A: The Coase Theorem is best explained by way of a real-world case study. A prominent example of an ext...

Q: 1. True of False: if false, please explain why a. A firm with a small labor force typically exhibit...

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts fo...

Q: Suppose a government has no debt and a balanced budget. Suddenly it decides to spend $10 billion whi...

A: Answer is given below....

Q: 2. Suppose the marginal utility of good A is 20 and its price is $4, and the marginal utility of goo...

A: The benefit and pleasure we derive from using a product or service is referred to as utility. In eco...

Q: A consulting engineer is currently evaluating 4 projects for the US government. The annual worth val...

A: Companies perform a cost-benefit analysis to determine which actions should be made and which should...

Q: Based on estimates the data for 2 types of bridges with different lives are as follows. If the minim...

A: We have given MARR=9% Timber Bridge Steel Bridge First Cost P500,000 P1,400,000 ...

Q: in their businesses. This will cause the aggregate demand curve to: Shift right O Stay the same O Sh...

A: The aggregate demand is the sum total of entire demand of goods and services in the economy.

Q: The Nash bargaining solution between the employer and the worker satisfies the fol- lowing maximizat...

Question

Definition Definition State in which the marginal benefit to a consumer is equal to the marginal cost of producing a product. Allocative efficiency occurs when all the market participants (buyers and sellers) have all of the knowledge required to make informed decisions regarding consumption and production of goods and services.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

If two painters can paint 200 square feet of wall in an hour, and three painters can paint 275 square feet, what is the marginal product of the third painter?
Define productivity efficiency and allocative efficiency. What conditions must be met in order to achieve them?
What does it mean when you compare allocative efficiency to worker efficiency? What are the significant differences?
Determine the output level creates allocative efficiency.
The optimal level of production is the level that either maximizes profits or minimizes losses. How does one determine the optimal level of production for any business? Explain.
If a fisherman catches fish from river then which factor of production is he using for his production? Explain this factor in detail
The optimal level of production for any company is the level of production that either maximizes profits or minimizes losses. How does one determine the optimal level of production for any business? Explain.
Briefly describe efficiency in production?
Explain the movement from point A to B for the production of these two goods.
If markets are efficient, is there anything to be gained by doing fundamental research? With which type(s) of market efficiency could fundamental research be valuable? With which type(s) of market efficiency would fundamental research be a waste of time?
What is the Theory of Production in economics? Explain..
EM.35 Which of the following is most likely to happen as an economy moves along a production possibility frontier producing more services and fewer goods? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a marginal costs of producing more services will rise, but allocative efficiency may increase. b marginal costs of producing more services will decrease, but allocative efficiency may increase. c marginal costs of producing more services will rise and allocative efficiency will decrease as a result. d marginal costs of producing more services will decrease and the allocative efficiency will increase as a result.