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Chapter 2: Q.15 (page 44)

What is productive efficiency? Allocative

efficiency?

Short Answer

Expert verified

Productive efficiency is the resources able to utilize and the technology.

Allocative efficiency indicates a selected blend of goods that society creates

Step by step solution

01

Step 1:Productive efficiency

Productive efficiency, also known as production efficiency, is the resources able to utilize and the technology, it is not practicable to make more of one good without reducing the amount of another good.

02

Step 2: Allocative efficiency

Allocative efficiency also known as allocational efficiency indicates a selected blend of goods that society creates, which also describes the loads that society expects the most.

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Most popular questions from this chapter

What are the similarities between a consumer’s budget constraint and society’s production possibilities frontier,

not just graphically but analytically?

It is clear that productive inefficiency is a waste since resources are used in a way that produces less goods and services than a nation is capable of. Why is allocative inefficiency also wasteful?

Could a nation be producing in a way that is allocatively efficient, but productively inefficient?

Return to the example in Figure 2.4. Suppose there is an improvement in medical technology that enables

more healthcare with the same amount of resources. How would this affect the production possibilities curve and, in

particular, how would it affect the opportunity cost of education?

Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?
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