When central planners in a command economy end up having a huge surplus of shoes and widespread shortages of bread in their economy, they have failed to attain
A) productive efficiency.
B) allocative efficiency.
C) minimum opportunity costs.
D) maximum process and revenues.

Question

Quizplus · Accepted Answer

Allocative efficiency refers to the situation where resources are allocated in a way that maximizes social welfare or utility. In this scenario, central planners have failed to allocate resources efficiently since they have a surplus of shoes and a shortage of bread, indicating a misallocation of resources. Therefore, the correct answer is B.

When Central Planners in a Command Economy End Up Having