A market that is achieving allocative efficiency must also be achieving productive efficiency.

Question

Quizplus · Accepted Answer

Allocative efficiency requires that resources are allocated in the most efficient way to meet consumer demand and maximize social welfare. Productive efficiency requires that goods and services are produced at the lowest possible cost. If a market is achieving allocative efficiency, it means that it is producing the optimal quantity of goods and services to meet consumer demand. This can only be achieved if resources are being used efficiently, which is a requirement for productive efficiency. Therefore, a market that is achieving allocative efficiency must also be achieving productive efficiency.

A Market That Is Achieving Allocative Efficiency Must Also Be