A note on productive vs. allocative effciency

A note on productive vs. allocative effciency - (draw...

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A note on productive (technical) and allocative efficiency (to help us understand Garber & Skinner, 2008) Read pp. 166-118 (top) in text Is the US health care system inefficient? Technical efficiency o Producer is receiving maximum output from a given input combination of inputs o Inefficiency means that inputs are misused or not working at full capacity
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Unformatted text preview: (draw graphs from pp. 116) • Allocative efficiency o Efficiency requires that inputs are put to their most rewarding use in society o Implies that each firm responds optimally to input prices o Assume firm’s desired level of output is 100 (draw graph from pg. 117)...
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