Explain the Significance of This Concept in Economics?
Allocative efficiency is a type of economic efficiency when manufacturer produces the service or product which is in high demand and desirable, society needs this product and ready to pay for it in the quantity they desire. Economy can be productively efficient but produce the goods in no need for people, it is called allocative inefficiency. Allocative efficiency is reached if a goods or service’s marginal benefit is equal to its Marginal Cost (i.e. Price = Marginal Cost). It is the point where supply (Marginal Cost) and demand (Marginal Benefit) curves cross each other. It is the point at Continue reading...