Two firms, A and B, are contemplating exporting a local fruit called durian to another country that has strong demand for durian. If both firms export their durians, each firm can earn an export revenue of $25 million. If both firms do not export, each firm can earn a revenue of $12 million from their own domestic market. If one of them exports durians and the other does not export, the firm that exports durians can earn an export revenue of $50 million. But the non-exporting firm will earn a revenue of $18 million.   (a)If both firms make a decision simultaneously, construct and analyse a payoff

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Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).