What is one industry, firm, or product that has disappeared from the market as a result of allocative efficiency and creative destruction and replaced by another industry, firm, or product? And what are some pros and cons?

What is one industry, firm, or product that has disappeared from the market as a result of allocative efficiency and creative destruction and replaced by another industry, firm, or product? And what are some pros and cons?

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter5: Difficult Cases For The Market And The Role Of Government

Section: Chapter Questions

Problem 7CQ

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Concept explainers

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).

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.

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