Asked by
Verified
Allocative efficiency occurs where the collective sum of consumer and producer surplus is at a maximum.
Allocative Efficiency
The state of resource allocation where goods and services are distributed according to consumer preferences and utility maximization.
Producer Surplus
The difference between what producers are willing to accept for a good or service versus what they actually receive.
Consumer Surplus
The gap between the amount consumers are prepared to spend on a product or service and the actual price they pay for it.
- Acquire insight into the concept of allocative efficiency and the means by which it is secured in a market environment.
- Apprehend the association between market efficiency and the surpluses of consumers and producers.
Verified Answer
Learning Objectives
- Acquire insight into the concept of allocative efficiency and the means by which it is secured in a market environment.
- Apprehend the association between market efficiency and the surpluses of consumers and producers.
Related questions
If Car Makers Are Required to Install Gadgets to Improve ...
Along a Demand Curve, Product Price and Consumer Surplus Are ...
Allocative Efficiency Occurs Where (For the Last Unit)maximum Willingness to ...
A Significant Amount of Positive Consumer Surplus Is the Reason ...
When There Is Allocative Efficiency in a Market, the Buyers ...