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Allocative Efficency

Allocative Efficency - Gaith Kalai Pg 126 3 4 3 How do you...

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Gaith Kalai Pg. 126 3+4 3 . How do you think the achievement of productive and allocative efficiency is related to the definition of Economics that we discussed in Chapter 1? Economics- the social scientific study of scarcity and how it affects the inner-workings of businesses on a small and large scale. Allocate efficiency- is achieved when MB =MC; since MB=P, this correlation is said to be MC=P. Productive efficiency- is achieved when P= minimum ATC. Both productive and allocative efficiency deal with scarcity and its definition; efficiency in general revolves around utilizing as little labor as possible to produce the most output which generates revenue and so on. Additionally, the best possible use of scarce resources is when the best possible combination of goods and services are used in conjunction to minimize the waste of resources. Productive efficiency relates to this modern definition of economics because this means that a
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