In the example shown, a society may produce only meat or vegetables, but its population prefers a varied diet. Clearly, not all combinations will satisfy this condition. As will be seen later, allocative efficiency is more formally expressed as a level of output where the marginal benefit to the consumer or the last unit consumed equals the marginal cost of supply of that unit. For it to be allocatively efficient it must satisfy consumer demand and consumer preferences. However, from the consumer’s (or society’s) point of view a particular combination of goods may not be allocatively efficient.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |