Hedrick Smith was a foreign correspondent for the New York Times who lived in the Soviet Union in the \(1970 \mathrm{~s}\), a period when the country had a planned economy rather than a market system. In a book he wrote about everyday life in the Soviet Union, Smith made the following observations about shopping in Moscow: At first it seemed \(\ldots\) that the stores were pretty well stocked. Only as we began to shop in earnest \(\ldots\) did the Russian consumer's predicament really come through to me. First, we needed textbooks for our children \(\ldots\) and found that the sixth-grade textbooks had run out.... We tried to find ballet shoes for our 11 -year-old daughter... only to discover that in this land of ballerinas, ballet shoes size 8 were unavailable in Moscow.... I tried to find shoes for myself. They were out of anything in my size but sandals or flimsy, lightweight shoes that the clerk, with one look at me, recommended against buying. "They won't last," he admitted. a. Judging by Smith's observations, briefly explain whether the Soviet Union achieved allocative efficiency in the production of sixth-grade textbooks, ballet shoes, and men's shoes. b. Can we tell from these observations whether the Soviet Union achieved productive efficiency in the production of sixth-grade textbooks, ballet shoes, and men's shoes? Briefly explain.

Step by step solution

01

Analyze Allocative Efficiency

The allocative efficiency deals with whether the goods produced match the goods desired by consumers. Looking at Smith's account, it can be concluded that the Soviet Union did not achieve allocative efficiency. The short supplies of sixth-grade textbooks and ballet shoes size 8 denote a failure to meet consumer demand in those areas. Additionally, the only shoes available in Smith's size were either sandals or flimsy varieties, again indicating that the supply did not meet the consumer demands.

02

Analyze Productive Efficiency

Productive efficiency refers to producing goods at the least cost possible. In Smith's account, there's no direct reference to the costs of production. Hence, based on the given information, it cannot be definitively stated whether the Soviet Union achieved productive efficiency in the production of sixth-grade textbooks, ballet shoes, and men's shoes

03

Summarize the findings

Based on the available information in Smith's account, it can be concluded that Soviet Union had not achieved allocative efficiency for the mentioned goods. As for productive efficiency, the provided observations don't give enough information to form a conclusion.

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