As the graph above shows, allocative efficiency is found at the point where thesupply and demand curvesintersect. At this point, the demand for some form of supply is at the same level as the price that is given for that form of supply. The result is that all of that product is sold ...
54) "point[ed] to important [...] problems of balancing distributional objectives against allocative efficiency" and Richard Musgrave (The Theory of Public Finance, McGraw-Hill, New York, 1959, p. Inflated executive salaries, lobbying excesses, and exorbitant election campaigns However, improving al...
Allocative efficiency requires equality between the value of an additional ton of maize and the value of the off-farm work that would be given up to produce the additional maize, which occurs where the slope of the PPF equals the negative of the ratio of the wage to the unit value of mai...
change channel tends to be negative, and in some cases can more than offset the positive effect from the cost-change channel. In these cases, allocative efficiency actually falls as trade frictions decline, as firms are less able to harmonize their mark-ups around the simple monopoly mark-up....
every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing. Allocative efficiency is the main tool of welfare analysis to measure the impact of markets and public policy upon society and subgroups being...