Problem 21

Introduction

Productive efficiency and allocative efficiency:

Productive efficiency is an economic phrase that describes a situation in which the economy's technology and resources do not allow it to produce one additional good without lowering the amount produced by another. When work is carried out steadily along the production possibilities, this event occurs. Allocative efficiency, on either hand, is defined as the current output at which the marginal cost is closest to the marginal gains. It's a market measure that shows how well all products are distributed to customers in a given economy.